Despite widespread concerns that the “One Big Beautiful Bill Act” will devastate the onsite energy market, a deeper analysis reveals a fundamentally different story—one of opportunity disguised as disruption. Headlines focus on the acceleration of the solar tax credit elimination; yet they’re missing the upside of the legislation’s 100% bonus depreciation provision. When the solar tax credit, which is still available in the short term, is combined with the new provision, the business cases for onsite energy projects become more favorable. The crux is meeting the solar tax credit deadlines and requirements for projects that rely on it for economic viability, which we’ll unpack in this post.
The market noise is understandable given the rapid changes, but businesses that look beyond the initial reaction will discover that this period of uncertainty mirrors the early 2000s tech landscape—where companies like Amazon thrived by controlling critical infrastructure during chaotic times. The energy landscape has indeed undergone dramatic changes in recent weeks, but for businesses willing to act strategically, these changes represent the opening of a historic window of opportunity rather than its closing.
Learning from Amazon: Why Infrastructure Matters in Uncertain Times
To understand the current moment, it’s worth looking back to the year 2000 when the tech bubble burst. At its peak in March 2000, the NASDAQ reached historic highs, but by mid-2001, Amazon had lost over 90% of its market cap, falling to a valuation of just $2.2 billion.
Yet this challenging period defined Amazon as the company we know today. During the early 2000s, Jeff Bezos and his team made two critical decisions that changed everything. First, they chose to make logistics a core competency rather than outsourcing to third-party providers, unlike rival eBay. Second, they focused on creating the world’s leading digital infrastructure, which became AWS.
The results speak for themselves: Amazon’s market cap has grown over 1,000x from its 2001 trough to over $2.3 trillion today, while eBay is worth about $34.7 billion—making Amazon nearly 70 times more valuable.
The lesson for today’s energy market: Just as Amazon chose to control critical business inputs during uncertain times, businesses today have an unprecedented opportunity to control their electricity, one of their most critical operational inputs.
The New Energy Era: Why Now is the Time to Act
Rising Energy Costs Are Here to Stay
The data tells a compelling story. From 2016 to 2020, energy costs remained relatively stable, with industrial rates actually declining slightly. However, from 2020 to 2024, we’ve seen dramatic spikes in energy costs—not due to electron production costs, but due to transmission, distribution, and grid hardening expenses, which will continue to rise.
These increases aren’t limited to traditional high-cost markets like California and New York. In 2019, there were 12 states with average commercial rates above $0.12/kWh. In 2024, there are 27 state above that price point. More and more states are facing high energy costs.
Grid Infrastructure Challenges
The challenges extend far beyond pricing. The American Society of Civil Engineers gave the U.S. grid a D+ rating, highlighting systemic problems across the infrastructure. According to the Department of Energy, the average age of large grid transformers that handle 90% of U.S. electricity flow is over 40 years old. Swiss Re reports that transformer malfunctions tend to escalate around the 40-year mark, while the American National Standards Institute found that transformers have a normal life expectancy of just 20-30 years under basic load conditions.
Supply and Demand Imbalance
We’re entering a period characterized by spiking demand for electricity combined with a supply squeeze. Turning on coal, oil and gas power plants won’t be able to meet expected demand. Only 4% of new capacity in 2024 came from natural gas, and there’s currently a 5-7 year backlog on new gas turbines. Meanwhile, utilities face significant deferred maintenance across the grid infrastructure.
Understanding the One Big Beautiful Bill Act
Section 48 Provisions: Solar Tax Credits
Projects beginning construction within one year of enactment (by July 4, 2026) must be placed in service within four years to qualify for tax credits. For projects beginning construction after July 4, 2026, they must be placed in service by December 31, 2027 to qualify for tax credits.
The critical insight here is that for most commercial and industrial projects, the key date is the December 31, 2027 place-in-service deadline. This means businesses should focus on getting projects contracted, permitted, interconnected, and built between now and the end of 2026.
Energy Storage: Good News Continues
Energy storage tax credits, primarily for batteries, remain intact as outlined in the Inflation Reduction Act. This continuation will keep spurring battery energy storage projects across the commercial sector. This is also true for battery storage added to a solar energy system.
Construction Timeline Definitions
The definition of “beginning of construction” requires meeting one of two tests: either physical work of significant nature must begin on the project, or the project must meet a 5% safe harbor by incurring 5% of project costs. However, following the bill’s signing, an executive order was issued urging the Treasury to provide updated guidance on the 5% safe harbor, with 45 days given for new guidance expected by August 18. For now, focusing on physical work beginning is the safer approach.
“Placed in service” means the date when a qualified facility or energy storage technology is ready and available for its intended use.
Foreign Entities of Concern (FEOC)
Projects beginning construction after December 31 of this year must meet material assistance requirements from prohibited foreign entities. This provision primarily targets China, Russia, Iran, and North Korea, though it’s largely focused on China where much equipment originates.
The material assistance cost ratio requirements specify that solar projects need more than 40% of components from non-prohibited foreign entities, while storage projects need more than 55%. The practical reality is that many developers are already adhering to these requirements, sourcing racking, inverters, and switchgear from the U.S. Some developers are even getting panels built in China with junction boxes added in the U.S. to meet the threshold requirements.
Bonus Depreciation: A Silver Lining
As noted in the introduction, the Act reinstates 100% bonus depreciation, allowing businesses to depreciate 100% of the asset in year one. This represents a significant improvement from the phase-down period where depreciation was 40% this year and scheduled to drop to 20% next year, then to zero. This change actually improves project economics in many cases by providing substantial upfront tax benefits.
Additional Provisions
The legislation maintains the IRA phase-out schedule for non-wind and solar zero-emission projects, including geothermal, nuclear, hydrogen, and fuel cells. Transferability remains available as long as no foreign entities of concern are involved. The commercial clean vehicle credit ends September 30, 2025, while the commercial charging credit (30C) remains available through September 30, 2026.
Economic Impact Analysis: What the Numbers Show
Individual Project Analysis
Analysis across three industry segments—supermarket, cold chain logistics, and manufacturing—reveals several key findings that should encourage business leaders. Near-term project economics actually improve due to the maintained tax credits through 2027 combined with 100% bonus depreciation benefits.
The post-2027 impact proves largely manageable because rising utility costs continue at 4-5% annually, equipment price reductions persist, and significant soft cost compression opportunities exist. According to NREL studies, 30-70% of total project costs are soft costs, representing a major optimization opportunity.
Systems can be optimized by reducing solar sizing by 8-12% while maintaining battery storage sizing, helping offset the loss of solar tax credits while maintaining overall project viability.
Portfolio-Wide Impact
Analysis of large portfolios including a supermarket chain across 27 states, cold chain operations across 37 states, and manufacturing facilities across 28 states shows varying but manageable impacts. Supermarket and cold chain logistics see overall impact largely unchanged, while manufacturing experiences a 29% reduction in net present value but remains economically viable.
The impact proves less severe than expected for several reasons. Investment tax credits were already planned to sunset eventually, so the timeline acceleration was partially anticipated. The 100% bonus depreciation significantly improves cash flows compared to the previous phase-down schedule. Portfolio optimization strategies can maximize economics across multiple projects, spreading risk and optimizing timing.
Strategic Recommendations: How to Act Now
Avoid Common Traps in Market Chaos
During periods of rapid change, knee-jerk reactions can create strategic missteps that undermine long-term success. Instead, businesses should focus on gaining internal alignment quickly, which is critical given the complexity across multiple stakeholders typical in energy projects.
Companies must optimize for current market conditions that can change daily while maintaining confidence in their chosen direction once they set course. Driving competition among suppliers ensures optimal outcomes and prevents getting deprioritized as the market heats up toward the 2027 deadline.
Immediate Actions for the Next Few Weeks
The most critical immediate step involves keeping current projects moving at a brisk pace to free up resources for broader portfolio planning. Simultaneously, businesses should develop a rollout strategy quickly while maintaining flexibility for changing market conditions.
Socializing the strategy across the organization ensures buy-in and valuable feedback while getting firm proposals on top priority projects begins the implementation process. These parallel efforts maximize the limited time available while building internal momentum.
Maximizing the Next 2.5 Years
Taking groups of projects to market, especially those in the same state or utility territory, creates economies of scale and streamlined processes. Running these processes in parallel allows companies to configure, procure, negotiate, and award contracts in under six months for each group.
This rinse-and-repeat approach maximizes the time available before 2027 while focusing on the most resilient projects that can withstand the loss of tax credits post-2027. The goal is to create a sustainable pipeline that extends beyond the immediate incentive period.
Key Takeaways for Business Leaders
1. This is a Marathon, Not a Sprint
While certain periods may require fast-paced execution, building a portfolio-wide strategy remains critical to avoid costly missteps. The market continues evolving rapidly, making it essential to start planning now with a flexible strategy that can adapt to changing conditions.
2. Don’t Think Solar Only
Battery costs continue declining while tax credits and incentives remain for storage systems. State, local, and utility incentives continue driving battery economics, making energy storage increasingly important for comprehensive energy strategies.
3. Ensure Supplier Compliance
Verifying that suppliers cover all bases regarding material cost ratios and prohibited foreign entities prevents costly compliance failures. Losing tax credits due to non-compliance after project deployment represents one of the worst possible outcomes for any energy initiative.
4. The Business Case Remains Strong
Even without solar tax credits, the business case for onsite energy remains compelling. Continuing utility rate increases, equipment cost reductions, soft cost compression opportunities, and growing grid reliability concerns all support the long-term viability of commercial energy projects.
The Bottom Line
The One Big Beautiful Bill Act represents both challenges and opportunities for forward-thinking businesses. While solar tax credits will phase out sooner than originally planned, several factors work strongly in favor of commercial energy projects.
The 100% bonus depreciation improves near-term economics significantly, while battery storage incentives remain fully intact. Rising utility costs continue driving the fundamental business case as equipment costs decline and substantial soft cost reduction opportunities emerge.
The chaos in the energy market is creating unprecedented opportunities for businesses that can move strategically and swiftly. Just as Amazon used a period of market uncertainty to build the infrastructure that would define its future success, today’s businesses have the opportunity to control their energy destiny during this transformative period.
The question isn’t whether the energy transition will continue—it’s whether your business will be positioned to benefit from it. Companies that act decisively now, with comprehensive strategies that extend beyond immediate incentives, will emerge as leaders in the new energy economy.
