Safe Harbor: How to Maximize Solar Savings in 2025

As we enter 2025 and see changes made to the ITC, it's important to consider how those changes could impact solar incentives. To learn more, watch our webinar about safe harbor and the state of the ITC in 2025.

With increasing tariffs, changes to Net Energy Metering (NEM), and the pending election cycle, it is more important than ever to secure incentives for your project now.

DISCLAIMER: TENCO SOLAR does not provide tax or accounting advice. This material has been prepared for informational purposes only and is not intended to provide nor should it be relied on for tax or accounting advice. You should consult your own tax, legal, and accounting advisors regarding your specific circumstances.

Safe Harbor Provision and Begun Construction

The IRS established a “Safe Harbor” provision in the Investment Tax Credit (ITC) which allows customers to preserve the tax credit of a given year by “beginning construction” on their solar project. The definition of “beginning construction” is at the core of the Safe Harbor provision and is important to understand before pursuing this strategy. 

Generally, there are two approaches, that qualify as “beginning construction”:

1. Incur 5% of the total project cost.
2. Begin physical work, of a significant nature, on the project.

Continuous Progress

To maintain safe harbor eligibility, the project needs to make continuous progress. Generally this test is understood to be met if a project is placed in service within 4 years of the "begun construction" date. It's important to keep accurate records of the progress being made on the project.

Executive Order & 2025 Changes

The Trump Administration has issued a new executive order that aims to tighten up the rules around what qualifies as "Begin Construction". While no changes have been issued as of July 31st 2025, we expect changes to come soon. That's why it's more important than ever to fully understand all of the safe harbor provisions.

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Rising Tariffs

After January 1, 2025, tariff rates on panels imported from China will increase from 25% to 50%. We expect the impact of the increased tariffs to be a sharp increase in the price of solar panels.

Falling Solar Export Rates

Net Billing is expected to take another big hit when the California Public Utility Commission releases its 2025 avoided cost calculator (ACC) updates. The ACC is used to determine export value, or the rate at which utilities are required to reimburse owners for the energy they export back to the grid. Export values are predicted to drop by 50% for most utilities.

Watch our Webinar

Watch our free webinar "Understanding Safe Harbor: Securing Your Tax Credits" to learn how IRS Safe Harbor rules can help you lock in your Federal Investment Tax Credits, even if the ITC is eliminated. Watch on demand here

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About TENCO SOLAR

TENCO SOLAR is a commercial solar installation company that delivers three decades of expertise across California residential and commercial properties. As a full-service EPC provider, we oversee projects from contract signing to final approval without outsourcing. Our services extend to solar financing, tailored to maximize client returns. Our integrity, innovation, and technical proficiency ensure flawless project execution at any scale.