The U.S. solar paradox: why growth defies the One Big Beautiful Bill Act's constraints

Simultaneously, a tidal wave of new electricity demand (driven significantly by AI/data centers) requires faster-than-ever construction.

In a recent in-depth webinar with PV Magazine USA, PVcase Senior Market Advisor Miguel Herrero broke down this complex reality, drawing on data from our 2025 State of Solar Project Development report.

The core insight: Market potential is high, but the road to execution is riskier than ever. 

What is the One Big Beautiful Bill Act? 

The "One Big Beautiful Bill" Act (OBBBA), signed into law in July 2025, represents a dramatic shift from the supportive clean energy policies established by the Inflation Reduction Act (IRA) of 2022. 

While preserving the technology-neutral structure of the clean electricity tax credits (Sections 45Y and 48E), the OBBBA introduces severe limitations specifically targeting wind and solar projects. 

These changes include an accelerated phaseout of the production and investment tax credits, requiring solar projects to be placed in service by the end of 2027 or begin construction by July 2026 to qualify, creating the "ticking clock" deadlines discussed in the webinar.

The new constraints from the OBBBA

The OBBBA regulatory pressures act as friction points for solar projects, challenging their viability before a single shovel hits the ground.

FEOC risks and supply chain stress

The Foreign Entity of Concern (FEOC) rules represent a major compliance challenge. Essentially, these rules restrict the use of components manufactured by, or sourced from, specific foreign entities. 

For a project developer, this introduces significant uncertainty into the supply chain, making it harder to lock in prices and guaranteed delivery dates. Crucially, if a project cannot prove compliance, it risks forfeiting lucrative renewable energy tax credits, jeopardizing its entire financial model.

The BOC/PIS deadline pressure

This issue revolves around two critical tax deadlines: the Beginning of Construction (BOC) in July 2026 and the Placement in Service (PIS) in December 2027. Projects must meet these dates to qualify for full federal tax benefits. The short timeline creates a high-stakes operational race. 

Developers are forced to assume more risk and rush critical development steps, which puts immense pressure on project viability and threatens the ultimate return on investment (ROI).

Permitting and interconnection bottlenecks

Complex regulations and processes govern the infrastructure required to connect a large solar plant to the grid. Delays are common, with median interconnection queues lasting over 30 months. 

A regulatory or grid connection delay is a primary threat to projects, potentially causing them to miss their PIS deadline and rendering tax credits unattainable. 

These lengthy waits also result in Internal Rate of Return (IRR) erosion, as capital remains tied up for years with no return.

Sustained high costs

Solar projects already face elevated costs due to module tariffs and a persistent shortage of skilled EPC (Engineering, Procurement, and Construction) services. These issues make project economics fragile. 

When combined with the risk of losing tax credits, the resulting pressure on profitability is forcing developers to demand exceptional efficiency and design precision simply to make a project bankable.

The latent project challenges

These OBBBA headwinds exacerbate pre-existing, fundamental risks inherent to solar development. 

Our 2025 State of Solar Project Development report, based on a survey of over 400 professionals, confirms these latent challenges define the pre-construction “Valley of Death”, the complex, data-intensive period before construction begins. This is precisely the phase where projects most often fail.

The report reflects just how much of a risk regulatory uncertainty is for solar project development. Solar professionals globally cite this as the second-most common reason for project failure — only narrowly trailing project finance — highlighting the industry’s deep-seated anxiety over shifting policies and compliance even before the OBBBA's specific challenges have taken full effect.

Furthermore, the data also pinpoints permitting and grid connection as two of the three most critical stages in the development process, with financing being the third.

The direct consequences for project viability

The integration of the OBBBA’s new regulatory pressures with the existing pitfalls of the pre-construction Valley of Death creates a compound risk that severely impacts project viability and value. 

The short BOC/PIS deadlines combined with 30+ month interconnection queues mean that regulatory friction and design flaws virtually guarantee a PIS miss and the forfeiture of essential federal tax credits, shattering the financial model.

Ultimately, this risk environment pushes projects toward two outcomes: project attrition due to the inability to secure financing against high costs and compliance uncertainty, or severe erosion of value as capital is tied up for years awaiting permits. 

This complex risk profile demands that developers prioritize flawless engineering and automated processes from the earliest stages to create the resilient foundation necessary for project survival.

The fuel: developer optimism and surging demand

Despite analysts' forecasts of a slower growth period (e.g., BloombergNEF's New Energy Outlook report foresees a potential 23% drop in new wind, solar, and storage additions through 2030), the industry's mood differs dramatically.

Our survey data shows that an overwhelming majority (95%) of solar professionals expect their pipelines to continue growing.

Strong financial backing

This optimism is supported by a high reliance on equity financing and rapid payback periods for utility-scale assets. Investors are committing deeper, riskier capital upfront, signaling strong confidence in completion.

Furthermore, utility-scale projects are enjoying some of the lowest payback times globally, with 35% of respondents reporting a payback period of less than five years — a clear signal of high asset quality and strong revenue streams.

Growing electricity demand

This widespread industry optimism is grounded in clear market realities.

After years of stagnation, U.S. electricity consumption is surging, driven primarily by two factors:

1. Industrial electrification: the electrification of transport and manufacturing is increasing the baseline load.

2. The data center boom: the singular largest driver is the exponential growth of data centers, driven by AI. Data center power consumption is set to more than double over the next decade. So much so, that securing power for data center projects has become priority one for data center projects. This creates a massive, consistent demand signal that improves the business case for new solar and battery energy storage projects, especially in grid-constrained regions.

The structural demand for solar is immense and growing rapidly, justifying developer optimism. 

The path forward: reducing execution friction

The U.S. solar paradox forces a single solution: 

Execution friction must be systematically reduced to match market demand. 

Since the financial and demand drivers are strong, the winning strategy lies in mitigating the pre-construction risks and new regulatory challenges created by the OBBBA.

To secure a project's future against costly delays and the high-stakes BOC/PIS race, successful developers are focusing on a strategic path to overcome execution friction by transforming their development workflow. 

This involves implementing best practices centered on precision engineering, standardized toolsets, and automation to build a resilient, bankable project foundation.

Watch the full webinar recording to get the detailed analysis and the specific steps required to secure your project's future.