States Rush to Build Clean Energy Projects Before Tax Credits Expire

Billions in federal incentives drive renewable energy push across the U.S.

Apr. 17, 2026 at 1:55pm

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A vibrant abstract illustration composed of overlapping triangles and circles in shades of blue, green, and yellow, conceptually representing the growth of renewable energy capacity driven by expiring tax incentives.Renewable energy developers race to build new projects before lucrative federal tax credits expire.Edison Today

U.S. states are expediting the development of large-scale renewable energy projects, including solar, wind, and battery storage, in order to qualify for billions of dollars in expiring federal tax credits. California, Colorado, Minnesota, New York, New Jersey, and Oregon are among the states taking action to secure these subsidies, which can help lower power prices as electricity demand from data centers continues to rise.

Why it matters

The federal tax credits, which provide a 30% investment incentive, are set to phase out in the coming years, making it critical for states to get projects approved and constructed in time to take advantage of the subsidies. This rush to build clean energy capacity is driven by the need to improve customer affordability amid rising electricity costs, as well as to help states meet their carbon reduction goals.

The details

To qualify for the tax credits, renewable energy projects must begin construction by July 4, 2026 and be completed within four years. This has led states to streamline permitting processes and utilities like Southern California Edison and Xcel Energy to rapidly contract for new solar, wind, and battery storage projects. The tax credits are worth an estimated $5 billion for Xcel's 10 projects in Colorado alone, lowering installation costs by 39%.

  • The federal tax credits for renewable energy projects will begin phasing out after 2026.
  • Projects must start construction by July 4, 2026 and be completed within four years to qualify for the 30% investment tax credit.
  • The California Public Utilities Commission has ordered utilities to add 6,000 megawatts of clean energy capacity between 2030 and 2032.

The players

Southern California Edison Co.

A major California utility that is pursuing renewable energy projects to qualify for the expiring federal tax credits in order to keep electricity prices affordable for customers.

Xcel Energy Inc.

A utility serving Colorado and Minnesota that has received approval for 3,200 megawatts of new solar, wind, and battery storage projects to take advantage of the tax credits before they expire.

SOLV Energy

A San Diego-based solar and battery developer that expects the growth of data centers to drive significant new renewable energy project opportunities.

Pivot Energy

A Denver-based solar developer planning to bid on projects in Colorado to qualify for the federal tax credits before they expire.

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What they’re saying

“It is critical to get projects that qualify for these credits, primarily for customer affordability.”

— William Walsh, Vice President for Energy Procurement and Management

“There was broad recognition that we needed to be able to capture these tax credits.”

— Robert Kenney, President of Colorado Operations

“Energy demand is driving more opportunity than the step down of the investment tax credit.”

— George Hershman, CEO

What’s next

The Internal Revenue Service will determine if any projects that miss the four-year construction deadline can still qualify for the federal tax credits.

The takeaway

The race to build renewable energy projects before the expiration of lucrative federal tax credits is driving a surge of activity across the U.S., as states and utilities work to secure billions in subsidies that can lower power prices and help meet climate goals. However, developers face challenges such as supply chain issues and local permitting that could jeopardize their ability to complete projects on time.