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United States policy surrounding renewable energy has fluctuated significantly as administrations change; President Jimmy Carter put solar panels on the White House in 1978, and President Ronald Reagan removed the panels in 1986. Those who have worked in the renewable energy industry anticipate these fluctuations and adapt their plans to accommodate them. However, the shift in energy policy since the commencement of the second Trump administration has been much less predictable, with many stakeholders in the industry wondering what changes are coming next and how best to insulate from ongoing, frenetic actions. Based on the executive orders, secretary’s orders and memoranda that have been issued over the past 30 days, stakeholders in the renewable energy industry should proceed cautiously, but not all threatened action should be cause for concern. Some are too broad to be effective, not within the scope of executive power, or require action of private citizens and companies. While there have been a lot of actions taken in the first 30 days of the administration, we are focusing this article on a select few that we believe could have a material effect on the solar industry in America. Ultimately, it is critical to have sophisticated counsel by your side when navigating the complex, constantly-evolving legal landscape discussed herein.
Key Executive Orders: A Breakdown
Executive Order 14154 (“Unleashing American Energy”, hereinafter the “UAE Order”)[1] and Executive Order 14156 (“Declaring a National Emergency”, hereinafter the “DNE Order”)[2] are the two executive orders that most directly address the solar industry, as they seek to stifle the renewable energy sector and increase oil and gas production, collectively aiming to reroute America’s energy policy. Specifically, the UAE Order targets the Green New Deal[3] by directing federal agencies to pause all disbursements appropriated under the Inflation Reduction Act (“IRA”) and the Infrastructure Investment and Jobs Act (“IIJA”) and to review processes, policies and programs for such disbursements to align with the goals of the administration, including encouraging exploration and production of energy on federal lands and waters, protecting the economic and national security of America, eliminating the “electric vehicle (EV) mandate” and safeguarding Americans’ choice of goods and appliances. The DNE Order requires federal agencies to use their emergency authorities to facilitate identification, leasing, siting, producing, transporting, refining and generating domestic energy resources, including directing the U.S. Army Corps of Engineers and other agencies to use emergency permitting provisions under the Clean Water Act and Endangered Species Act to the “fullest extent possible.”
Executive Order 14154: Unleashing American Energy
The UAE Order seems like it would have an impact on the solar industry by pausing all disbursements under the IRA and IIJA, but that may not impact solar developers’ operations just yet. The UAE Order pauses disbursements under the IRA; however, tax credits are typically not interpreted as disbursements and therefore should not be restricted at the moment. The IIJA created funding for research and development of clean energy and recycling solutions, but clean energy was not its primary goal per se, so the direct impacts to solar may be smaller. The primary concern to date is the interpretation by certain agencies and service providers, which are hesitant to act contrary to the stated purpose and goals of the administration. For example, the Army Corps of Engineers ceased its permitting of solar related facilities based on the directive under the DNE Order to focus its efforts on the production of energy (with the definition of energy under the DNE Order not explicitly naming renewables).
Takeaway: We do not expect the UAE Order to limit the economics of solar projects directly. However, we do expect the uncertainty of interpretation to create a lot of transactional uncertainty. For any action required of a federal agency that is not automated, stakeholders should scrutinize whether the UAE Order will increase the likelihood of a delay or denial. For example, in a tax credit transfer transaction, a pre-filing registration must be made with the Internal Revenue Service (“IRS”) to register the transfer of tax credits, after which the IRS assigns a registration number to be included on the transferee’s return when claiming the credits. It is uncertain to what extent the UAE Order might delay receipt of a registration number (or whether the registration number will be received). Even where there is no delay, the uncertainty creates additional friction and risk-shifting during transactions.
Executive Order 14156: Declaring a National Emergency
Successful implementation of the DNE Order is unlikely for a number of logistical reasons, including contrary actions by the administration and responses from the energy industry and foreign governments. For example, the stated goals of the DNE Order are expected to be stifled by certain actions taken by the Department of Governmental Efficiency to date. Specifically, the DNE Order directs governmental agencies to expedite permit approvals for oil and gas sites, but the lengthy permit review process is unlikely to be expedited with fewer federal employees; simultaneously, the Department of Governmental Efficiency is attempting to reduce the federal workforce with a speed and resolve that makes many people uncomfortable. Further, according to a report issued by the Bureau of Land Management in July of 2024[4], there are nearly seven thousand issued but unused permits to drill, suggesting the “energy emergency” is not caused by slow governmental permitting, but rather by the industry neglecting to increase production.[5] However, funding for the actions directed in the DNE Order is subject to appropriations, and there is no clear plan to secure the appropriation of funds to carry out the DNE Order’s goals.
Takeaway: We expect the DNE Order will create slowdowns on permitting and other administrative speed bumps in the immediate future. The long-term impact on demand for solar power will not become clear until funding for the DNE Order goes through appropriations and, following appropriations, until the benefits to the oil and gas industry from the DNE Order begin to materialize. Even then, the potential increase in foreign production of oil may limit the economic benefits of increasing domestic oil and gas production during this administration, reducing the incentive of domestic oil and gas companies to make long term capital investments in increasing production. If oil prices decline and demand does not increase, oil and gas companies are less likely to take the long-term risk of refocusing on oil and gas if they have already begun repositioning into sustainable energy technologies. They could benefit from oil and gas subsidies, but they will likely continue to develop sustainable energy with the certainty they will weather the current storm. At the individual level, without the decrease to prices in oil, some Americans may find that solar energy is a better investment, keeping demand for solar energy consistent with prior years.
Executive Order 14151: Ending Radical and Wasteful Government DEI Programs and Preferencing
Executive Order 14151 (“Ending Radical and Wasteful Government DEI Programs and Preferencing”, hereinafter the “DEI Order”) terminates programs, offices and roles focused on diversity, equity and inclusion.[6] This includes equity related grants and contracts from and with the federal government. On its face, the DEI Order does not immediately seem to relate to the solar industry, but there are certain federal tax incentives that have been structured to promote “environmental justice” and “equity.” For example, the low-income adder[7] creates an additional financial incentive for projects that are in or that benefit low-income communities — while the low-income adder is not the only reason to develop a project that benefits a low-income community, losing this incentive can be the death knell for projects that were already expected to deliver a low return on investment. This incentive is subject to allocation of available capacity, however, so there is a possibility that allocations could be delayed or halted even without an executive order or change of law.
The National Association of Diversity Officers in Higher Education, the American Association of University Professors, Restaurant Communities Centers United, and the Mayor and City Council for Baltimore, Md., have filed a lawsuit against the administration arguing that the DEI Order exceeds the President’s authority and violates the Spending Clause and due process under the 5th Amendment because of its vagueness and are seeking a declaratory judgement that the DEI Order is unlawful and unconstitutional and preliminary and permanent injunctions against the DEI Order.[8] The outcome of that case could hinder the administration’s impact on solar programs justified by support for low-income communities.
Takeaway: The DEI Order could affect the energy community and low-income adders, depending on its interpretation and depending on the outcome of court challenges. While the federal incentives can make the economics of a project better, it is important to note that the DEI Order does not limit or eliminate similar DEI, environmental justice or equity programs at the state level. For example, we do not expect significant changes to Community Solar[9] programs in the near term. Therefore, we would recommend that stakeholders tread carefully to protect themselves against downturns in the energy community and low-income adders, but projects that are economically viable without those adders should be less concerned by this executive order.
Executive Order 14162: Putting America First in International Environmental Agreements
Some of the most widely discussed actions by the current Trump administration have been related to foreign relations, specifically tariffs, Executive Order 14162 (“Putting America First in International Environmental Agreements”, hereinafter the “America First Order”)[10] and the America First Trade Policy Presidential Memorandum (the “America First Memo”).[11]
Many solar companies that were active during the first Trump administration will remember the impact that tariffs had on renewable energy project construction and development, including increased lead times for certain imported components, increased costs for those components and increased risk. While domestic production of renewable energy components has increased, domestic production has not increased swiftly enough since the IRA was enacted to negate the effects of tariffs. However, even if components were capable of being manufactured domestically in a sufficient quantity to support the domestic renewable energy market, the materials required to manufacture many components would still require importation. In such an instance, the manufacturers would be burdened by the tariff and pass those increased costs to the end user. One way that companies circumvented this issue during the first Trump administration was through acquiring components in intermediary countries — countries that are not subject to a tariff and that have bilateral trade agreements with America and the countries manufacturing the components. However, shipping solar panels to an intermediary country to be warehoused, short term or long term, increased the cost of shipping, the travel time and risk of damage — in some instances, microfractures to solar panels caused by warehousing in unfavorable conditions in the intermediary country decreased panel lifespan, decreased panel efficiency and ultimately created more costs for developers and owners. The tariffs presented during recent campaign events were less targeted than prior tariffs, so it is uncertain whether the trade policy of this administration can be undermined by circumvention in the same way. Separately, trade wars can also have the impact of increasing inflation, which typically result in an increase to interest rates; many developers and asset owners rely on loans to finance their development, construction and operations, each of which will be more costly if interest rates rise.
The America First Order instructs the U.S. Ambassador to the United Nations to submit a formal written request to withdraw from the Paris Climate Agreement, which has certain benchmarks for transitioning to renewable energy globally. The process of withdrawing from the Paris Climate Agreement is a lengthy one and according to its current rules cannot be effective until one year after the notice is delivered.[12] The fact that the United States’ withdrawal is not effective yet does not mean the administration will abide by its terms until such withdrawal is effective — enforceability of international binding agreements has been in question for centuries, and President Trump has provided no indication that his administration will attempt to achieve the goals set out under the Paris Climate Agreement.
The America First Memo orders various governmental offices to analyze the causes of America’s annual trade deficits and determine the impacts on economic and national security. The results of this investigation are due on April 1 of this year, so it is difficult to ascertain whether any material changes will arise out of the investigation, and, more importantly, what impact such changes would have on the solar industry. The domestic content adder has driven a lot of growth in domestic production of components, through promotion of the Buy America Requirements[13], but necessary minerals for some components are not available naturally in the United States and will need to be imported.
Takeaway: We expect costs for certain renewable energy components to increase as a result of broad tariffs because of the inability to produce those components using materials found exclusively in the United States. Regardless of whether retaliatory tariffs are levied in response to the second Trump administration’s announced tariffs, we would expect Americans to see higher inflation, which may result in higher interest rates and increased cost of capital. Tariffs and increase cost of capital negatively affect renewable energy development, by decreasing the profit margins of renewable energy projects and reducing the number of economically viable projects. However, withdrawing from the Paris Climate Agreement, which is expected to result in abandoning the benchmarks set out under the Agreement, is unlikely to create additional impacts beyond that of the UAE Order and the DNE Order. The UAE Order, the DNE Order, and the America First Order all seek to achieve the same thing: redirecting energy policy to support oil and gas, while shifting policy away from renewable energy; their impacts will not necessarily be cumulative though, as the actions expected to be taken to effectuate the UAE Order and the DNE Order have the potential to overlap with actions taken to effectuate the America First Order.
Uncertainty Prompts Hesitation
Separately, at least one title company is suspending its underwriting of certain real property rights granted by the U.S. Department of the Interior (due to an apparent lack of authority to execute enforceable real property documents based on Orders 3414[14] and 3415[15] issued by the Acting Secretary of the Interior (the “Interior Orders”)). The suspension of authority by the Acting Secretary of the Interior is valid for 60 days following its date of publication (January 29, 2025), so clarity on the authority of Department Bureaus and Offices should become available in the next few weeks. At that time, ideally, title companies will resume underwriting with a better understanding of the Interior Orders. While title concerns may not necessarily be a concern for all stakeholders, it does highlight the chilling effect a change at the agency level can have — notably, interpretation of the laws giving rise to the renewable energy Investment Tax Credits (“ITCs”) created and expanded by the IRA is largely derived from treasury regulations, revenue procedures and notices issued by the IRS.[16]
Takeaway: We anticipate both governmental agencies and private actors will pause or delay actions associated with renewable energy for the near future, waiting for challenges to executive orders and other actions taken by the administration. These challenges will allow courts to shape interpretation of the executive orders. Challenges in court may take several weeks or several months to arrive at a reliable decision, and certain investigations, reviews and suspensions required by the Executive Orders come due or expire in the next few weeks. Once more clarity becomes available, agencies and private actors should start to resume the actions they paused or delayed, so staying informed about the outcomes of challenges and general actions of the administration could prove to be helpful in expediting negotiations or other processes once they begin moving again.
Federal Budget
While it is still early in the budget process, there are some clear indications that the budget will follow historical trends; the Republican party will desire to cut spending and cut taxes, while the Democratic party will desire to increase spending and increase taxes. In 2017, the Tax Cuts and Jobs Act (the “TCJA”) was signed into law, after being passed on party-line votes in both chambers of Congress — even in that instance, the final version of the bill was being negotiated right up until the vote occurred. Many of the tax cuts in TCJA sunset during this administration, and many legislators are looking to extend tax cuts favorable to their constituents. It would be irrational to assume a similarly targeted bill could not be passed; however, what provisions will ultimately remain in the bill cannot be reliably predicted. With a lot of campaign rhetoric and policy positions hinging on elimination of the “Green New Deal,” it is likely that the budget will target some or all of the tax credit policy supporting renewable energy investment in order to support tax cuts for the majority party’s desired constituencies.
Takeaway: The federal budget is likely to target part of the industry, but it could be the case that certain adders or the base rate of renewable energy ITCs are targeted. Some adders, such as the energy community adder or low-income adder, are ripe for elimination, while the domestic content adder and prevailing wage requirements support many of the current administration’s goals. While the direct benefits of calling legislators to express concerns about legislative changes can be hard to see, there are direct benefits to addressing these risks in contract negotiation. Contract negotiations often focus on the allocation of risk between counterparties. In the context of a project sale, this takes the form of non-refundable payments, price adjusters and liquidity. In the context of tax credit transactions, this often takes the form of covenants, warranties and representations. Enter into these transactions with eyes wide open to the risks that currently exist in the industry.
Best Practices for the Solar Industry
One of the largest impacts arising out of the actions of the current administration will be the response of risk averse parties in the industry — specifically, acquirers, investors and lenders who have concerns about future profitability in the solar industry may factor risk into the underwriting. Having knowledge of the enforceability and likely impact of these executive orders can provide strong arguments to keep deals alive, even if they are put on hold for a period of time while the dust settles. We do not expect the industry to be hindered long-term by the current administration, so the biggest takeaway from the first 30 days is that stakeholders should try to “buy time” for performance. Well-drafted contracts will be critical to protecting businesses when there are delays, whether it be in construction contracts or true-up payments for the sale of a project; we recommend consulting legal counsel to familiarize yourself with laws in order to have stronger footing in negotiating new contracts and to review existing contracts to understand each party’s rights and obligations under those contracts.
Unfortunately, contracts that are already in place cannot easily be revised to shift risk or timelines. Only time can tell us what the actual impact of this administration will be on the solar industry, but the decision to issue these directives as executive orders instead of by promulgating new laws indicates there is not strong belief that the executive and legislative branches are aligned on energy policy. History has shown us that even where the Oval Office and both chambers of Congress are held by one party, there can still be a lot of policy infighting that stifles the creation of new laws. The renewable energy industry could weather a four-year storm, or two years if the midterm elections shift control of Congress, but we expect much of the tempest to be behind us. Either way, the forecast calls for sun.
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This DarrowEverett Insight should not be construed as legal advice or a legal opinion. This Insight is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. The contents are intended for general informational purposes only, and you are urged to consult your attorney concerning any particular situation and any specific legal question you may have. Please reach out to us if you need help addressing any of the issues discussed in this Insight, or any other issues or concerns you may have relating to your business. We are ready to help guide you through these challenging times.
This Insight does not constitute written tax advice as described in 31 C.F.R. §10, et seq. and is not intended or written by us to be used and/or relied on as written tax advice for any purpose including, without limitation, the marketing of any transaction addressed herein. Any U.S. federal tax advice rendered by DarrowEverett LLP shall be conspicuously labeled as such, shall include a discussion of all relevant facts and circumstances, as well as of any representations, statements, findings, or agreements (including projections, financial forecasts, or appraisals) upon which we rely, applicable to transactions discussed therein in compliance with 31 C.F.R. §10.37, shall relate the applicable law and authorities to the facts, and shall set forth any applicable limits on the use of such advice.
[1] https://www.whitehouse.gov/presidential-actions/2025/01/unleashing-american-energy/
[2] https://www.whitehouse.gov/presidential-actions/2025/01/declaring-a-national-energy-emergency/
[3] This directive and any other directives targeting the Green New Deal are open to subjective interpretation, as the non-binding Green New Deal resolution was rejected by the Senate on March 26, 2019, and was subsequently reintroduced by Rep. Alexandria Ocasio-Cortez and Sen. Edward Markey on April 20, 2021, but never voted on. Thus, the interpretation of this directive by agencies may span from taking no action to targeting any principles supported by the Green New Deal.
[4] https://www.blm.gov/sites/default/files/docs/2024-10/BLM-FY2024-Application-for-Permit-to-Drill-Status-Report-July-2024.pdf
[5] Those in the oil and gas industry may remember the significant profits lost nearly 20 years ago when the 2008 financial crisis hit after oil and gas companies spent the early 2000s increasing production; as a result, they may proceed with caution given the relative instability of the global economy. Further, other nations such as Indonesia and Argentina have already indicated they intend to increase their own oil production in response to the American increase and many economists think ending the war in Ukraine will increase the amount of Russian oil in the global market as a result of sanctions going away; more oil will be available from sources other than United States creating more competition in the global markets and in turn creating the potential for American oil and gas companies to see negative impacts to their profits. Private companies are also following suit with BP, a British company, and Equinor, a Norwegian company planning to increase their oil production, neither of which drill in the United States. No such announcements have come from American gas companies; to the contrary, Chevron has indicated it plans to increase the oil it exports from Venezuela because of improved relations with the country thanks to the Trump administration and ExxonMobil is expanding its drilling in Guyana.
[6] https://www.whitehouse.gov/presidential-actions/2025/01/ending-radical-and-wasteful-government-dei-programs-and-preferencing/
[7] https://www.jdsupra.com/legalnews/what-irs-s-low-income-adder-guidance-4732588/
[8] https://storage.courtlistener.com/recap/gov.uscourts.mdd.575287/gov.uscourts.mdd.575287.1.0.pdf
[9] https://www.jdsupra.com/legalnews/should-solar-developers-pursue-7751473/
[10] https://www.whitehouse.gov/presidential-actions/2025/01/putting-america-first-in-international-environmental-agreements/
[11] https://www.whitehouse.gov/presidential-actions/2025/01/america-first-trade-policy/
[12] https://unfccc.int/sites/default/files/english_paris_agreement.pdf
[13] This was part of the Build America Buy America Act, which was enacted as part of the IIJA in 2021. To the extent the IIJA is affected by the UAE Order, the Buy America Requirements may be affected as well.
[14] https://www.doi.gov/document-library/secretary-order/3414-establishment-new-department-leadership-team-and-temporary
[15] https://www.doi.gov/document-library/secretary-order/3415-temporary-suspension-delegated-authority, as amended by https://www.doi.gov/document-library/secretary-order/3415-a1-temporary-suspension-delegated-authority-amendment-1
[16] The authority of agency guidance itself may be in question following the successful challenge of the Chevron Doctrine. https://www.jdsupra.com/legalnews/the-cost-of-ambiguity-post-chevron-2983785/
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