What Has Been Cancelled, And What's Not.

The Real Estate Espresso Podcast

What Has Been Cancelled, And What’s Not.

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What Has Been Cancelled, And What’s Not

Welcome to the Real Estate Espresso podcast, your morning shot on what’s new in the world of real estate investing. I’m your host, Victor Menasche. Today, we’re taking a look at the changing environment for government incentives specifically for green energy. We’re going to examine the incentives for solar power and discuss what’s changed under the new administration, but more importantly, what has not changed.

President Trump’s executive order in the first week of his administration rolled back many of the provisions in the Inflation Reduction Act, affecting clean energy projects. Hence, if you’re an investor that invested in a project assuming the financial benefit of those incentives remained intact, you’re potentially facing financial hardship.

One provision in the Inflation Reduction Act was the REEAP program, administered by the Department of Agriculture. This program provided grants for solar and wind programs. However, these grants were cancelled within the first week of the U.S. presidency. This has sparked debate about whether the executive branch has the power to affect spending. While it’s true that Congress holds the power to authorize spending, the ability to block spending in the form of grants is murkier. Grants, by nature, aren’t mandated by Congress and one might or might not receive the funds.

An executive order titled “Unleashing American Energy” has paused the disbursement of grants and loans under the Inflation Reduction Act—this includes those supporting renewable energy projects and electric vehicle infrastructure. For instance, it halts EV-charging funds. The Department of Transportation previously had $3 billion allocated in funds for state electric vehicle charging infrastructure as part of the Inflation Reduction Act’s strategy to promote electric vehicles.

Significantly, the tax credits associated with solar energy remain untouched, since those were enacted by legislation that passed the house and the senate—and repealing them would require similar legislation, which hasn’t happened yet. Thus, these programs endure, for the time being.

Lastly, new solar panel manufacturing capacity has opened in the U.S., which may, when considering import tariffs and tax credits, hold up to scrutiny even when pitched against cheaper alternatives abroad. Understandably, one should consider investments that make financial sense independently. Tax incentives, at their best, should form only a part of the business case—not the primary reason for investing.

In conclusion, the first 100 days of administration is about demonstrating significant changes that will make an impact on the economy, world stage, and on fulfilling campaign promises. Changes to tax incentives, which would require legislation, shouldn’t be expected to occur within the span of 100 days. At this moment, there is nothing to suggest that tax credits for solar power generation are about to be repealed. So, if you’re planning on using solar power generation as a way of achieving the required energy points under your local building code, you should proceed with your plans.

As you think about that, have an awesome rest of your day. Go make some great things happen. We’ll talk to you again tomorrow.

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