Shares of Vestas Wind Systems A/S soared by as much as 18% on August 18, 2025—the sharpest intraday gain for the company since July 2022—after the U.S. government issued long-awaited guidance on tax credits for clean energy projects, according to Bloomberg. This surge, which added roughly $3 billion to Vestas’s market value and pushed it above $21 billion, reflected a wave of relief among investors and developers who had been anxiously awaiting clarification on how new Trump administration rules would affect the future of wind and solar energy in the United States.
The new guidance, released by the Internal Revenue Service on August 15, 2025, answers pressing questions about eligibility for federal tax credits that are set to phase out in the coming years. For more than a decade, renewable energy developers could qualify for these credits simply by showing they had spent 5% of a project’s total cost—a provision known as the “safe harbor” rule. But under the rules now taking effect, almost all new wind and solar projects must actually begin physical construction to qualify, marking a significant shift in policy direction. The safe harbor rule has been eliminated for new projects, though those with existing safe harbor status will retain it. Eligibility is now measured by physical work performed at the project site, not by financial investment alone.
Trade associations representing renewable energy developers had braced for even tougher restrictions. Some industry insiders feared that the investment threshold could be raised to 51%, a move that would have required developers to spend more than half of a project’s total cost upfront to qualify for credits. Instead, the IRS guidance was less stringent than anticipated, prompting a surge in renewable energy stocks. As Heatmap reported, companies like EDP Renovaveis SA, Nordex SE, and Orsted AS all saw their shares climb on the news—by as much as 6.9%, 4.4%, and 4.1%, respectively.
“People have been lining up and waiting for policy clarity,” said Vestas CEO Henrik Andersen in an interview with Bloomberg TV last week. That clarity finally arrived, and the market responded with enthusiasm. According to analysts at Citigroup Inc., the new rules are “far less onerous than any stricter rules that had been widely feared.” Jefferies analysts echoed this sentiment, writing in a note, “We see close to the best possible outcome in the guidance compared to initial talks.”
But not everyone is celebrating. While the new rules avoided the most draconian scenarios, industry groups still voiced concerns about the added complexity and potential cost increases. “At a time when we need energy abundance, these rules create new federal red tape,” Heather O’Neill, president and CEO of Advanced Energy United, said in a statement quoted by Heatmap. “These rules will make it more difficult and expensive to build and finance critical energy projects in the U.S.”
The changes stem from President Donald Trump’s executive order following the signing of the One Big Beautiful Bill Act (OBBBA), which directed the Treasury Department to tighten eligibility for the remaining federal tax credits. The new rules stipulate that wind and solar assets generating electricity after December 31, 2027, will not receive a tax credit unless construction begins by July 4, 2026. Projects that start before July 4, 2026, have at least four years to complete, while those starting after face a much shorter completion deadline of just a year and a half.
The timing of the new guidance is noteworthy. This past weekend marked the third anniversary of many of these tax credits, which were originally created by the 2022 Inflation Reduction Act (IRA)—a landmark piece of legislation that catalyzed more than $360 billion in energy and manufacturing investments and was expected to drive the installation of over 155 gigawatts of new solar and wind energy by 2030. As Heatmap contributor Advait Arun observed, the IRA and its companion, the Bipartisan Infrastructure Law, were “paradigm-shifting attempts at market-shaping.” Yet, the rollback of these credits under the Trump administration has raised concerns about the future of clean energy investments in the U.S.
Despite the new restrictions, the guidance does offer some flexibility. Projects can still establish that they have started construction by completing “physical work of a significant nature,” and this definition includes certain off-site work, such as the manufacturing of equipment under a binding contract. There’s also a carve-out for smaller solar projects—those less than 1.5 megawatts—which can continue to use the 5% rule, providing a lifeline to rooftop solar and community-scale installations.
Still, the changes have not gone unchallenged. Clean energy groups argue that, at a moment when the U.S. needs to expand its electricity supply to meet rising demand and increasingly erratic weather, the new rules could slow progress. According to a report from Grid Strategies, Trump’s order to keep large fossil-fueled power stations scheduled for retirement operating indefinitely will cost U.S. ratepayers $3.1 billion per year—and up to $6 billion if applied more broadly. Meanwhile, supply chain issues, such as a shortage of transformers, have further complicated the outlook for grid reliability and clean energy expansion. Ben Boucher, a senior supply chain analyst at Wood Mackenzie, warned, “The U.S. transformer market stands at a critical juncture, with supply constraints threatening to undermine the nation’s energy transition and grid reliability goals.”
Politically, the new rules reflect a sharp departure from the Biden administration’s more robust support for renewables. While the outlook for wind power is now dimmer than it was under Biden, the recent guidance at least provides much-needed certainty for investors and developers, if only for the next few years. Arun, writing for Heatmap, argued that Democrats should learn from the shortcomings of their previous legislative efforts and prepare to build on their successes if given another chance. He noted that “the rollback of the IRA only reveals how much Democrats left on the table three years ago—and how much farther a real climate policy could go.”
For now, the guidance has averted the worst-case scenario feared by clean energy advocates, and the market’s positive response signals that developers may yet be able to move forward with new projects before the OBBBA deadlines hit. But as the U.S. energy sector faces mounting challenges—from political gridlock and legal battles to supply shortages and rising costs—the path to a clean energy future remains as complex and contested as ever.
With the clock ticking on key deadlines, and with both sides of the political aisle staking out sharply different visions for America’s energy future, the coming months will be crucial for the renewable industry, investors, and the millions of Americans whose lives and livelihoods depend on affordable, reliable, and sustainable power.