Energy Incentives Are Shifting—Timing and Strategy Are Critical
Brad Dockser, CEO of GreenGen, addresses the impact of the One Big Beautiful Bill (OBBB) on commercial real estate owners and investors.
On July 4, 2025, H.R. 1, the One Big Beautiful Bill Act (the Act), was signed into law, introducing significant changes to the federal energy tax landscape. Among other initiatives, the legislation modifies or repeals several key incentives established under the Inflation Reduction Act (IRA), affecting how real estate owners and investors should approach energy efficiency, resilience, and capital planning.
While not unexpected, the shift marks a new chapter in clean energy investment—one where timing, strategic project execution, and attention to risk will matter more than ever.
Key Changes to Federal Energy Incentives
Several tax credits and deductions that have supported decarbonization projects across the built environment are now on the clock:
- 45Y (Clean Electricity Production Tax Credit) & 48E (Clean Electricity Investment Tax Credit)
Repealed for solar and wind projects that are placed in service after Dec. 31, 2027, unless construction begins before July 4, 2026. Additional changes pertaining to safe-harbor thresholds are expected.
Other technologies (e.g., geothermal, storage) follow IRA’s original phase-out through 2034.
Domestic content rules have tightened. Projects with foreign-controlled entity involvement face added restrictions starting in 2026.
- 30C EV Charging Credit
- Ends for projects placed in service after June 30, 2026.
- 179D Energy-Efficient Commercial Building Deduction
- Repealed for projects that begin construction after June 30, 2026.
- 45L Credit for New Energy-Efficient Homes
- Ends for homes acquired after June 30, 2026. Applies to single-family, multifamily, and manufactured housing.
These changes drastically narrow the window for leveraging federal support for clean energy upgrades, particularly in the commercial and multifamily sectors. Developers and asset managers must now reevaluate how these changes affect project underwriting, design, and timing.
Despite rollbacks in clean energy support, the Act includes several provisions beneficial to real estate investment strategies:
- Opportunity Zones (OZ): Extended through 2033, with updated maps and a reduced AMI threshold (from 80% to 70%). This could open new high-potential areas for impact-oriented investment.
- Bonus Depreciation: 100% bonus depreciation reinstated for qualified property acquired and placed in service from Jan. 20, 2025 – Dec. 31, 2029, and elective 100% depreciation for qualified production property through 2030.
- Low-Income Housing Tax Credit: Bond financing requirement lowered from 50% to 25% of development costs, significantly expanding access to credits for affordable housing developers.
What This Means:
Act Now, Before the Window Narrows
Many federal incentives remain available…for now, but the timeline is compressed. To maximize project ROI and secure available incentives, real estate owners need to prioritize implementation. Projects that begin construction before mid-2026 deadlines can still capture meaningful tax benefits and rebates, but delays could result in higher out-of-pocket costs and longer paybacks. Seize this narrowing window of opportunity—before today’s incentives vanish and tomorrow’s projects come with steeper costs and diminished returns.
States Will Drive the Next Wave of Climate Policy
As the federal government scales back its role, states and cities will increasingly set the pace on energy and building performance regulations. From New York City’s Local Law 97 to Boston’s BERDO and California’s decarbonization mandates, momentum continues to shift toward local enforcement of carbon and performance standards. At the same time, state and utility programs are expanding to include ratepayer-funded incentives and green banks. Even as federal dollars decline, there’s still significant capital available to support decarbonization — it just requires knowing where to look and how to put it all together.
Risk & Resilience: The Real ROI
Energy investments are no longer just about operational savings—they’re about maximizing total asset value. As real estate risk profiles intensify, so does the importance of engaging the right stakeholders strategically.
Energy and resilience projects must be framed around the value they deliver across the entire asset lifecycle, including factors like:
- Insurability
- Climate and transition risk adaptation
- Asset attractiveness and differentiation
- Long-term property valuations
The key to profitable decarbonization lies in communicating this broader value clearly translating technical upgrades into strategic risk reduction, asset value protection, and a future-proofed portfolio.
GreenGen’s Recommendations for CRE Investors
- Fast-track clean energy projects especially solar, storage, and EV infrastructure to meet upcoming deadlines. Ensure that portfolio-wide programs and asset projects can meet the new deadlines and stipulations. States and cities with supplementary incentives or excellent feasibility (e.g., solar projects for geographies with high cost of power) should be prioritized to maximize ROI.
- Accelerate capital planning for roof, HVAC, lighting, and appliance retrofits to capitalize on 100% bonus depreciation before it sunsets in 2029.
- Re-evaluate Opportunity Zone portfolios to incorporate newly eligible census tracts and take advantage of long-term tax benefits.
- Stay focused on state and local compliance while federal policy may shift, benchmarking, performance standards, and carbon caps at the municipal and state levels (e.g., LL97, BERDO, and the EU’s EPBD) continue to expand. Projects that align with both near-term incentives and long-term regulatory readiness offer the best protection against rising compliance costs, fines, and stranded asset risk.
- Evaluate projects holistically, including insurance, compliance risk, tenant demand, and long-term resilience—not just energy savings.
- Review equipment sourcing to ensure your developers are reducing supply chain reliance on China in alignment with bill provisions that heavily penalize components manufactured outside the U.S.
- Evaluate projects tied to increased demand such as data centers. Constructing data centers to support AI infrastructure can unlock substantial federal funding, grants, and tax incentives (subject to FEOC).
At GreenGen, we remain committed to helping clients navigate a rapidly shifting policy landscape – translating incentives into action, and sustainability into ROI. To explore what this means for your portfolio, or how to seize the window before incentives change, contact us at hello@greengen.com or visit www.greengen.com.
– Brad Dockser
For additional information, please reach out to the GreenGen team:
