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Treasury guidance on “start of construction” could have been worse, but will nevertheless make it harder to get clean energy on the grid.
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Good morning and happy Friday, 

After a couple of weeks of not-so-great headlines for wind, the EIA says the US will add over 16 GW of wind (and nearly 60 GW of solar) during the two-year period between the end of 2024 and the end of 2026. Vestas’ CEO is also bullish on U.S. wind and believes “the onshore wind sector will continue to grow throughout the rest of the decade, despite uncertainties at the federal policy level.”

But the biggest story for clean energy developers is that last Friday, Treasury released its guidance on the definition of “start of construction.” We’ve devoted this week’s Must Read to the matter, but the short version is that the vise has tightened. That said, it could have been worse, and some clean energy investors were relieved at the outcome.

In other news, in an interview with Politico, Energy Secretary Chris Wright acknowledged that power prices are rising and that this could hurt Republicans in the midterms, but said he hopes voters will know who to blame: Democrats. And on Thursday, the U.S. Commerce Department said it has opened a national security investigation into the import of wind turbines and components.

Read on for more.

News of a Significant Nature


Last Friday, the Treasury Department released guidance regarding what constitutes “start of construction” for clean energy projects seeking to qualify for 45Y production tax credits and 48E investment tax credits. Experts say the changes are “less restrictive” than what some expected, but will nevertheless “make it harder” for developers. Here’s a cheat-sheet summary of key things to know: 

  • The biggest change is that the long-standing definition of “start of construction” – the bright-line 5% capital expenditure test – has been scrapped. 

  • Instead, projects must start “physical work of a significant nature” by July 6, 2026 or achieve commercial operation by the end of 2027 to qualify. Notably, whereas previously it was acceptable for a project to have “begun” physical work, under the new guidance this work will have to have been “performed.” 

  • The guidance says “Provided that physical work performed is of a significant nature, there is no fixed minimum amount of work or monetary or percentage threshold required to satisfy the Physical Work Test,” and work on and off the project site counts.

  • This ambiguity “leaves uncertainty about how much work is required,” and could give the project finance crowd cold feet. 

  • However, one thing is clear: “physical work” does not include “preliminary activities” such as permitting, design, or holding components in inventory, “even if the cost of those preliminary activities is properly included in the depreciable basis of the wind or solar facility.” 

  • There’s also a continuity requirement for construction activities, although “certain disruptions are excused;” and there’s a continuity safe harbor that could allow projects whose construction exceeds the four-year window to still qualify, provided they can demonstrate continuous actual construction, something that “will be determined by the relevant facts and circumstances.”

  • Under the OBBBA, projects that received “material assistance” during construction from a “prohibited foreign entity” aren’t eligible for tax credits; although Trump’s executive order directed Treasury to weigh in on “foreign entities of concern” (FEOC), the guidance did not address this issue; Treasury says it will deal with FEOC restrictions “as is necessary and appropriate.”

⚡️ The Takeaway


Mixed reviews. Renewable advocates see the Treasury guidance as giving clean energy the cold shoulder, with SEIA saying it means “China will continue to outpace us in the race for electricity to power AI," and ACP saying it “undermines the integrity of our energy grid and our legislative process.” However, another key audience – Senators Chuck Grassley (R-Iowa) and John Curtis (R-Utah) – have warmed to it. Earlier this month the duo placed holds on three of President Trump's nominees to the Treasury Department in an attempt to help ensure the guidance preserved the well-established definition of “start of construction,” but E&E News reports that “since the guidance came out on Friday, both Grassley and Curtis have put out positive statements backing the plan.”

Gone with the Wind


Across the South, renewable developers are running into mounting roadblocks at the local level. In an opinion piece for Utility Dive, the Southern Renewable Energy Association warns that blanket bans and restrictive ordinances in Arkansas, Louisiana, and Mississippi are discouraging investment and depriving rural communities of the economic benefits that come with wind and solar. Instead, they argue, counties should turn to model ordinances—like those advanced by the American Clean Power Association—that balance property rights with community safeguards and create predictability for investors.

  • Arkansas has quickly become ground zero for these fights. This year the state passed the Wind Energy Development Act, which on paper promotes wind development but in practice imposes some of the strictest setback and noise requirements in the country. At the same time, counties across the Ozarks—including Carroll, Madison, Boone, Newton, and most recently Crawford—have enacted multi-year moratoriums on wind and solar projects, citing landscape and property value concerns. Developers warn the message to investors is clear: “closed for business.”

  • Mississippi is taking a more cautious approach. The state’s first major wind farm, AES’s 184 MW Delta Wind project in Tunica County, is already online and delivering tax revenue and farm income to the region. But in response, lawmakers introduced SB 2227 to study potential “unintended impacts” of turbines, at one point even proposing a one-year statewide moratorium. The amended version dropped that language, but the debate underscores how fragile momentum remains.

  • Louisiana, meanwhile, is moving forward with statewide rules. Governor Jeff Landry signed HB 459 this summer, requiring permits, bonding, and setbacks for wind, solar, and storage projects over 75 acres. The framework aims to bring clarity and avoid piecemeal local bans, though parishes can opt out and pass their own ordinances—a choice that could re-create the patchwork challenges seen in neighboring states.

⚡️ The Takeaway


The lesson for developers is clear: ordinances matter. Where counties and states put predictable, science-based rules in place, projects move forward, communities reap tax revenue, and landowners gain steady income. Where bans and vague moratoriums prevail, billions in private investment and local benefits stall. Building relationships with state and county officials—and helping communities understand the tangible upside of saying “yes” to renewables—is no longer a side task. It’s one of the industry’s most critical priorities. The industry’s growth in the South will hinge not only on technology or policy incentives, but on whether communities see themselves as partners in that story.



A Cool Use For Hot Air


One result of the climate crisis is that many of us tend to view carbon dioxide in a negative light (while making exceptions for its highly appreciated presence in champagne and beer). Of course, we all know that carbon dioxide is essential to life on earth, primarily due to its role in photosynthesis (not to mention that without it, Planet Earth would be an ice-covered rock). 

Well, it turns out we can add a new item to the list of benefits carbon dioxide provides: low-cost, long-duration energy storage. Energy Dome is an Italian company that’s bringing carbon dioxide batteries to the market, and they recently gained a new strategic investment partner: Google.

The technology Energy Dome uses is relatively straightforward, and indeed, its batteries essentially operate like compressed air energy storage, albeit with a gas that boasts a higher energy density than regular air.

Energy Dome facilities feature “a round, white dome that evokes the inflatable roofing that covers professional tennis tournaments.” Inside, electricity (ideally from carbon-free generation sources like wind or solar) is used to pump carbon dioxide into a compressor “where it gives off heat (which is stored) and turns into a liquid that’s stored in carbon steel tanks.”



The liquid carbon dioxide is stored in tanks; to reverse the process, “an evaporator turns the liquid back into pressurized gas,” releasing the stored energy. Key features of the technology include long dispatch (it can provide electricity for up to 24 hours, much longer than the typical 4-hour window for lithium-ion batteries), and durability – the company claims the batteries “can last 30 years without any kind of degradation.”


Another important aspect of this approach is that it uses “off-the-shelf components from established supply chains,” according to the company’s COO. These items “are readily available, cost-competitive, with performance guarantees, and [are things] with which banks are comfortable,” making the technology attractive to investors and buyers. Perhaps in the near future our Google searches will be powered by CO2.
Thanks for diving into the Developer Dispatch with us.
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