The Commercial Solar Incentive Window Is Closing. Here Is What That Actually Means for Your Project.

How to Qualify: Establishing the Start of Construction

The IRS recognizes two methods for establishing that construction has begun. We help clients navigate which approach applies to their specific project.

The 5 Percent Safe Harbor Test

You can establish the start of construction by paying at least 5 percent of total project costs toward qualifying equipment. This locks in your eligibility, and you then have four years to complete the installation.

This method requires documentation showing the payment was made and that you maintained continuous progress toward completion.

The Physical Work Test

This requires demonstrating that significant physical work has begun on site. Preliminary activities like permitting, engineering studies, or site clearing do not count. The IRS is looking for actual construction work: foundation installation, racking assembly, electrical infrastructure.

Which method applies depends on your project specifications. We work with all commercial clients to ensure timelines align with IRS requirements and that documentation clearly establishes the construction start date.

‍Maximizing Your Incentives: The Bonus Adder Opportunity

The base ITC is 30 percent, but qualifying projects can capture additional credits that push the total to 40 or even 50 percent.

Domestic Content Bonus: +10%

Projects using equipment manufactured in the United States can qualify. The threshold percentages for what counts as domestic content are defined by the Treasury Department and increase over time.

Energy Community Bonus: +10%

Projects located in designated energy communities qualify. These include brownfield sites, areas with closed coal mines or power plants, and census tracts meeting certain employment criteria. Several areas in Minnesota qualify.

‍Prevailing Wage and Apprenticeship Requirements

To claim the full 30 percent base credit on systems over 1 MW, projects must pay prevailing wages and meet apprenticeship requirements. Failure to comply reduces the base credit to 6 percent.

The bottom line: For a $500,000 commercial project, the difference between a 30 percent credit and a 50 percent credit is $100,000. That is real money left on the table if you do not explore these options.

‍Planning Your Timeline

Commercial solar projects do not happen in weeks. From initial conversation to operational system, the typical timeline is 6 to 12 months. Some projects take longer.

Typical Project Timeline Breakdown

Site Assessment and Proposal: 2-4 weeks We evaluate your roof or ground space, review utility bills, and model system performance and financials.

Engineering and Design: 4-6 weeks Detailed system design, structural analysis, and permit preparation.

Permitting: 4-8 weeks Timeline varies significantly by jurisdiction. Some municipalities move quickly. Others do not.

Equipment Procurement: 4-12 weeks Lead times depend on equipment selection and supply chain conditions.

Utility Interconnection Application: 4-12 weeks The utility reviews your application and determines what grid upgrades, if any, are required.

Construction: 2-6 weeks Actual installation time depends on system size and complexity.

Inspection and Commissioning: 2-4 weeks Final inspections, utility approval, and system activation.

Add these up and you can see why starting the conversation in early 2026 for a July 2026 safe harbor deadline is cutting it close.

Is There Still Time for Your Project?

It depends on where you are in the process.

If you are just starting to explore solar: You likely have time, but not unlimited time. Starting the evaluation process now gives you the best chance of qualifying for safe harbor by July 2026.

If you have proposals but have not committed: Move your timeline up. The permitting and interconnection phases often take longer than expected.

If you have a signed contract but have not started construction: Work with your installer to ensure safe harbor requirements are met before the deadline. Documentation matters.

We help clients of all project sizes navigate the specific IRS requirements that apply to their situation and ensure proper documentation throughout the process.

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Frequently Asked Questions

What is my current electricity rate, and how has it changed?

Understanding your electricity costs is the foundation of evaluating solar. Most businesses see rates increase 3-5 percent annually. We review your utility bills to identify your current rate structure and project future savings.

How much of my energy usage can solar realistically offset?

This depends on your available roof or ground space, your energy consumption patterns, and your facility's orientation. Most commercial installations offset 40-80 percent of electricity usage. We model your specific situation during the site assessment.

Does my building or location qualify for ITC bonus adders?

Possibly. If your project uses domestically manufactured equipment or is located in a designated energy community (including certain areas in Minnesota), you could qualify for an additional 10-20 percent in tax credits. We help identify all available incentives during the proposal phase.

What is my timeline for making a decision relative to the July 2026 deadline?

Given the 6-12 month project timeline, businesses should begin evaluations now to comfortably meet the July 4, 2026 construction deadline. The permitting and utility interconnection phases often take longer than expected.

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How do I get started?

We are happy to walk through the specifics for your situation. Contact us to schedule a site assessment and review your project's potential.

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Disclaimer: Tax credit eligibility depends on individual circumstances. Consult a tax professional for guidance specific to your business.

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