There’s an influx of fresh faces in the energy space these days. It’s not uncommon to attend an event and spot an unfamiliar company on the business end of a lanyard. I should know; I’m repping one of them.
“…And what is Factor This, exactly?” quickly became a commonly fielded question at last month’s Infocast Solar + Wind Finance & Investment Summit in Phoenix, Arizona.
Is it a renewable IPP? AI-enabled grid tech? A SaaS company? Drone startup? Consultant?
All fair considerations.
For what it’s worth, I’d tell them, Factor This is the consolidated digital masthead for the legacy magazine publications Renewable Energy World, POWERGRID International, and Hydro Review. But I wasn’t hanging out at the Arizona Biltmore to talk. I was there to listen… and swipe handfuls of jellybeans from booths in the lobby, if too many people weren’t watching.
Infocast’s signature senior-level summit of who’s who in renewables operates under Chatham House rules, which means reporter-types me aren’t typically allowed to roam off-leash and report everything they see and hear. The event is recognized throughout the industry as one of the annual get-togethers where deals get done; it’s understandably bad for business for all parties when someone breaks a story that wasn’t meant to be broken.
And yet, dear reader, they welcomed me anyway.
I’d have to respect some rules, of course. No attributed quotes or identifying information, no recordings, no in-the-weeds financial stuff that could get someone into trouble. But I would be allowed to disseminate the vibes, so to speak, behind the castle walls.
I have returned from the desert with sentiments to (and two new pairs of sunglasses; turns out the jellybeans were a gateway drug to more giveaway items). Here’s what the people powering our electric future with solar, wind, and energy storage are thinking about.
A Window of Opportunity is About to Close
the date: July 4, 2026. America’s semiquincentennial is also the deadline to begin construction of wind and solar facilities to capitalize on the full value of Section 45Y (Production) or 48E (Investment) tax credits. To qualify, projects must be placed in service no later than December 31, 2027, and developers must either expend at least 5% of the total cost or start “physical work” by July 4.
The credits, established by the Inflation Reduction Act (IRA) and reeled in by the much-ballyhooed One Big Beautiful Bill (OBBB), have transformed how cash flows into the clean energy sector, ushering in record deployment levels and novel tax structures. After enjoying years of rapid growth under the IRA, the renewables industry has been somewhat checked by the OBBB, resulting in recalibrated frameworks and the ushering in of a new phase in which timelines, strategies, and financing assumptions are changing.
For instance, there is an ongoing mad dash to safe harbor equipment and start as many projects as possible to meet the upcoming July deadline, prompting developers big and small to get creative to maximize their portfolios. A common tactic for some has been to stock up on inexpensive Chinese solar modules and meet the threshold for qualifying for pre-December 31, 2025, start of construction, thereby skirting onerous Foreign Entity of Concern (FEOC) requirements.
One large-scale cleantech company reports “opportunities are wide open” in this window, and it has nearly doubled its near-term pipeline ahead of July 4, adding multiple gigawatts in what was described as “a very complex process.” It’s certainly not as easy for smaller, less nimble firms, but larger entities are simultaneously working to localize their supply chains to future-proof against cost increases. An emphasis on reshoring manufacturing in the United States helps those endeavors, but neither happens overnight.
Thankfully, investors aren’t spooked. They are familiar with step-downs and phase-outs, and the requirements to qualify for the pre-OBBB credits are old hat: the 5% spend and physical work test are well established, and “the IRS isn’t a creative agency,” as one person pointed out. Buying transformers (if you can navigate the current 18-24 month lead times) for a project is a well-established way to meet the spending threshold, but other customizable equipment not typically held in inventory should work as well, such as site-specific solar racking systems or even torque tubes.
“Stay within those confines, and you’re pretty good,” recommended a representative from a large investment firm.
Deal Flow Slowed by Superior ‘Vintage’ of Tax Credits
Since the Section 48 credits have fewer strings attached, in particular, ones regarding compliance with FEOC, they have emerged as a “superior vintage,” preferred by investors over available technology-neutral credits.
“You are competing against a lot of inventory with a significant advantage against you,” as one speaker put it.
At least 33 GW (and by some accounts, as much as 70 GW) has been grandfathered in, and it only makes sense that equity will go there first. In fact, multiple sources report that deal flow in Q1 2026 has indeed been a little slow as a result of this phenomenon, but most expect things to open up in the second half of the year, once the old Section 48 incentives are used up and investors get more comfortable with 48E and PTCs. On the same token, if you started construction before the end of 2025 and ducked FEOC, you’re feeling pretty good.
It’s important to remember that tax directors at Fortune 500 companies are considering the entire tax credit universe (nearly as exciting as the Marvel Cinematic Universe!), not just renewable energy credits (RECs), one executive reminded. Transferability was d because it was simple and easy, he added; making things complicated has been a negative. Plus, large corporations saw their tax liabilities significantly reduced by the OBBB, which affected demand at the end of the year, impacted pricing, and prompted some re-forecasting. In general, investment firms are starting to notice a swelling of tax credits available in the market and a differentiation between which parties are attracted to them and the risk profiles of a given project.
“People a credit that doesn’t have a recapture risk as long as it’s not too expensive,” one investor offered.
A lot of capital still wants to come in, according to another analyst, and more companies want to invest in tax equity rather than just buy tax credits, encouraging creative monetization of tax equity benefits to satisfy a roughly $50 billion market. One sticking point, though: tax equity does not taking on risk. Since equity partners typically come in at mechanical completion or later, it’s difficult for those parties to accept too many headaches, given the nature of their position. They aren’t going to take over and run the assets, after all. That means they want to see buttoned-up legal opinions on any concerns and proof of ongoing compliance to feel comfortable. And with that in mind…
FEOC is the elephant in the Room
The OBBB’s Prohibited Foreign Entities (PFE) or FEOC (IRS Notice 2026-15) clauses stand out as the most significant hurdles to putting more shovels into the ground. One executive describes our predicament as “a very dynamic moment,” as The Powers That Be try to determine if the FEOC stuff is a manageable or structural constraint on deployment. Another called it “an existential risk, because if you don’t do things right, you don’t have a project.” One thing is for sure: right now, it translates to tighter construction cycle timelines.
The IRS issued guidance in February that clears up some lingering questions held by developers, investors, and lenders, but not all of them. The agency has since been collecting comments, which were due by March 30. The Department of the Treasury is currently reviewing the submissions and plans to issue final guidance soon. For now, undefined risk leads to a conservative interpretation of statutes, one speaker cautioned, and to unlock the full potential of tech-neutral tax credits, the industry has to come together and send a message to Treasury about what needs clarification. All parties must understand what it means to be FEOC-compliant and to have traceability and long-term accountability.
“Some of our lenders and banks are rightly prioritizing section 48 deals, and they’re going to wait until the dust settles on 48E,” said Justin Johnson, the newly named CEO of developer, owner, and operator Arevon, who agreed to be quoted in this article. “So it’s delaying projects, stalling projects, really, until it gets worked out.
Until the IRS releases more FEOC guidance, Johnson fears, his contemporaries will be rightfully cautious, and the risk to pipelines is real. Accordingly, Arevon has safe harbored about 3 gigawatts (GW) worth of equipment.
“You can pivot to alternate sources, alternate tax equity investors, but typically, they want more generous terms, so it impacts the project returns,” he explained. “If you’re in our situation, you’re wondering: Should I just wait a little bit, and then some of the more traditional banks we work with are ready to invest? Or do I need to just proceed with the project and lock in a slightly lower return now?”
“It’s definitely delaying the CODs for projects,” Johnson confirmed, suggesting most late 2027 COD projects are now ly into Q4 2027 or early 2028.
Lenders at Infocast’s Solar + Wind Finance & Investment Summit lamented not “having a real answer yet” for themselves or sponsors. What needs to be documented? When? At close, or ongoing? If the loan is syndicated, what will that mean? A deeper dive into due diligence is required moving forward, and strong indemnities will need to be included in contracts.
Some of the first tax insurance policies covering FEOC risk are being structured right now, executives reported. Additional compliance burden, including verification procedures, is being worked into packages investors can rely on.
“They might not cover all the risks,” one speaker noted, but they help define them.
You should expect to add a percentage point to your insurance costs, another analyst suggested, citing strong demand for tax credit insurance late last year, which created a backlog and led to less-competitive terms in the market. The market is, frankly, saturated with requests.
“Try to get ahead of it if you want tax insurance this year,” he recommended. “Q2 this year will be a huge push to get deals done for filings.”
In the meantime, diversifying suppliers and improving traceability should be the aim. One developer said compliance risk has increased about tenfold compared to just three years ago, but they have no choice but to put together a compliant supply chain. Some independent power producers (IPPs) are going so far as to send third-party auditors to their original equipment manufacturers (OEMs) to take geotagged photos of parts for insurance purposes.
Farther out, the 2028 ITC is subject to a 10-year recapture risk. New questions arise: What happens if a project is sold, and in year nine, the new owner hires a Chinese company to run it? Who is exposed?
“It’s not degradation (of the credit). This is all or nothing,” said one speaker. “And the focus and intention behind documentation will only be ramped up.”
That means serialized parts, send and receive dates, labor hours, detailed work records, and more. One analyst predicts ITC prices could be driven down to the point where solar is mostly taking PTCs, calling the all-or-nothing nature of the ITCs a “not-so-subtle way to attack ITCs overall and shift toward PTCs.”
“They’re still subject to these limitations, but a contractual change that changed control would mean a gradual phasedown of those credits rather than what would happen with ITC,” the tax attorney detailed. “This attacks smaller developers.”
“It’s not about a project being profitable- it’s about being financeable.”
– Large project developer at the 2026 Solar + Wind Finance & Investment Summit
The U.S. Needs Clearer, More Consistent Policy
It’s not just FEOC that the clean energy community wants clarity on; it’s the Trump administration’s policy direction as a whole. The President’s attacks on offshore wind projects led to some awkward, lengthy phone calls from international developers explaining the situation to their home offices abroad. Back-and-forth tariffs have driven up prices unpredictably and made some projects untenable; what flies on federal lands seems to be a moving target. The ongoing war in Iran is complicating economics in ways that are only beginning to manifest (and might just benefit renewables in the long run).
All things considered, the U.S. is not too attractive for investment right now, one attendee ventured. A Switzerland-type return in a country where the rule of law is sometimes called into question is not what most firms are looking for. If you’re doing business there, a “proactive approach” with the administration is recommended.
Some speakers reported seeing creative contracting mechanisms assembled to help mitigate tariff and permitting risks, especially on the supply chain side, in addition to more offtakers ready to take on some risk, but as much predictability as possible will be key to future investment
“The industry doesn’t need perfect policies,” one developer leveled. “We need clarity on policies… That will allow us to make deals and meet these timelines… We can’t build fast enough.”
Tariffs are not being looked at as a “doomsday scenario” anymore, another speaker at the Infocast event d. “They are going to be a part of everyday life, and we have to account for that.”
There’s a consensus that development of wind power (onshore, at least), solar PV, and energy storage will remain profitable for the foreseeable future, as they are the most cost-efficient technologies to deploy and the fastest to bring into operation, especially as the wait for a gas turbine stretches into 2030 or so. That doesn’t mean everyone will survive.
Expect Mergers and Acquisitions
Well-positioned individuals expect major mergers and acquisitions (M&A) activity in the renewables space soon, perhaps even involving companies with strong credit ratings and robust pipelines. One executive asked rhetorically: “Do we really need 30 different distributed generation solar companies in the United States?”
Probably not, but who gets to stick around?
There has been a lot of M&A activity recently, suggesting a buyer’s market, but not much merging of major platforms. In the eyes of one energy executive, many of the players coming to market are flawed opportunities for buyers. More pain, or the long-term expectation of it, will squeeze out everyone but the best-equipped participants and drive some quality companies to join forces.
“Cash is queen,” he asserted. “All these project commodities start flowing to cash. A flight to quality is something we want.”
It’s not just the small-scale shops, either. One source tells Factor This that as many as a dozen utility-scale developers with big pipelines “are in serious trouble,” and a few you might not expect are exploring a full sale. “We will see more consolidation,” the source confirmed. “I expect to see the acquisition of a well-performing company this year.”
Familiar Bottlenecks Remain
Some industry experts recognize a shortage of growth capital available as an obvious deployment bottleneck. Not so obvious? Transmission and interconnection.
“Everyone wants to go to heaven, but nobody wants to die,” chuckled one speaker. “Same with transmission.”
Everybody needs it. Nobody wants to pay for it.
The real barrier to deploying the grid we need is cost allocation for transmission, some argued at the Solar + Wind Finance & Investment Summit. Data centers are paying their fair , but high-voltage lines benefit everyone. The feds are trying to do their part: the Federal Energy Regulatory Commission (FERC) is encouraging states to help determine cost allocation rather than relying on utilities, while the Department of Energy (DOE) provides financing for transmission projects through GRIP and now SPARK.
Bottom line: We need more HVDC across the country. It’s technically challenging, and interregional planning is difficult, but it has to be figured out. There’s too much value unlocked by doing so to ignore.
In a related problem, interconnection queues are still packed, pretty much coast to coast. FERC 2023 has had a positive impact, some report, flushing speculative projects out of queues by requiring them to post a security. Further thinning out and prioritization of critical projects are needed. Could we finagle a one-time, free dropout to further thin queues? Big RTOs PJM, SPP, and MISO are trying everything from cluster studies to queue jumping. Unfortunately, one developer confessed, only the bigger shops will be able to work through the mess- but it’s an opportunity to migrate projects to bigger, sturdier balance sheets.
The only reason co-located generation for large loads has become such a hot topic is that the interconnection process isn’t working, another developer bemoaned. Siting a data center, power system, and backup is really tough, and we can expect NIMBYism to increase as a result.
The security situation for co-located generation “keeps me up a bit at night,” one speaker confessed. Large generation sitting behind a meter, from a grid security standpoint, made them “super nervous,” as does the fact that managing a large load is not a hyperscaler’s primary business.
“If they go down, it could affect a large footprint of other parties, nefarious or not,” they warned.
On April 1, the North American Electric Reliability Corporation (NERC) issued draft registration criteria requiring “computational load entities” (CLEs), primarily data centers and cryptocurrency mining facilities, to register with NERC. These registration requirements are part of a suite of reforms that the nation’s electrical reliability watchdog is advancing as part of its efforts to account for the reliability impacts of large load customers.
The Path Forward
Many executives believe future volume will exceed pre-OBBA levels, citing major tailwinds, including the benefits of the IRA, the proliferation of AI and data centers, trends in load growth and capacity shortfalls, and more. However, some argue they haven’t seen a compelling case to get too deep into construction plans beyond 2026 yet- at least not until there’s some sort of discount in the market pricing in FEOC compliance risk.
We can expect more quality projects moving forward, particularly as AI is deployed on “the really tough stuff,” and can count on the continued growth of a domestic supply chain.
Further ahead, repowering currently operational systems looms large as an opportunity to add capacity. One major developer cited at least 30 GW of repowering opportunities before 2030, enabling a project’s useful life to be extended by 50% and increasing power production by up to 20%. About 10 GW of that particular pipeline has been safe harbored.
A representative from a prominent IPP described this as a Dickensian moment: the best and the worst of times. A tremendous opportunity lies ahead, but the path is full of perils.
“We are recreating our entire energy infrastructure… This is The Great Demand,” he offered. “A huge opportunity.”
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