A lot has changed, and investors should care. Some policymakers are proposing to shorten or phase down clean energy credits. These discussions include the solar tax credit and the battery storage tax credit. Policy uncertainty can delay projects and raise paybacks. Real estate owners can still make projects pencil with the right structure. Owners can combine state energy rebates and federal alternatives like 179D and 45L.
Action Today
- Inventory planned solar, storage, and efficiency scopes.
- Note which depend on federal clean energy credits.
- Build a fallback plan that uses state energy rebates and 179D and 45L alternatives.
How do potential rollbacks affect payback and NOI?
Federal credits reduce upfront cost and shorten payback. The solar tax credit currently targets 30 percent in many cases. The battery storage tax credit can create similar reductions when paired with solar. Tight underwriting should compare scenarios with and without these credits.
Illustrative payback comparison
| Scenario | Upfront Cost | Credit Applied | Net Cost | Annual Utility Savings | Simple Payback |
| With 30% solar tax credit | $500,000 | $150,000 | $350,000 | $60,000 | 5.8 years |
| Without federal credit | $500,000 | $0 | $500,000 | $60,000 | 8.3 years |
| Without credit + state rebate 15% | $500,000 | $75,000 | $425,000 | $60,000 | 7.1 years |
| With 30% credit + storage add on* | $800,000 | $240,000 | $560,000 | $95,000 | 5.9 years |
*Storage savings reflect peak demand reduction and limited backup value. Actuals vary by rate design.
Action today
- Recalculate pro formas with and without federal clean energy credits.
- Add a scenario that includes a state rebate or utility incentive.
- Update DSCR and debt sizing for each scenario.
What federal alternatives still exist for buildings?
Owners can use tax provisions that do not rely on the solar tax credit. Owners can use the 179D commercial deduction. Owners can use the 45L residential credit for qualifying units. Incentives can be layered with state energy rebates.
Quick primer
- 179D applies to commercial and some multifamily above three stories.
- 179D is a per square foot deduction based on modeled efficiency.
- 45L applies to new or substantially renovated units.
- 45L is a per unit credit tied to certified performance.
Action today
- Ask your CPA to run 179D and 45L screens on active designs.
- Confirm which measures qualify in your state.
- Align design targets early to avoid redesign costs.
Which state energy rebates can fill the gap?
Many states fund utility rebates for HVAC, controls, and solar. Some states offer battery incentives for peak reduction. Local programs can stack with federal alternatives.
Where to find them
- Use DSIRE to search by ZIP for state energy rebates.
- Check your local utility’s business incentive page.
- Ask your city about resilience grants.
Action today
- Print a rebate list for each property.
- Add incentive application deadlines to your project calendar.
- Assign a teammate to own paperwork and pre approval calls.
How should owners triage in flight projects?
Projects under design can be accelerated. Projects near construction can be value engineered. Pipeline scopes can be split to capture near term incentives.
Triage checklist
- Confirm interconnection status with your utility.
- Lock equipment pricing and lead times in writing.
- Order long lead items if cancellation terms are acceptable.
- Stage scopes by fastest payback first.
- Keep a version that can proceed with only state energy rebates.
- Preserve change orders that can be reversed if credits return.
Action today
- Hold a 30 minute call with your GC and installer this week.
- Document three options for each project.
- Include a no federal credit scenario.
What strategies still raise value without federal credits?
Owners can target measures with consistent savings. Savings that lower peak demand can create strong ROI. Tenant comfort improvements can lift retention and rent durability.
High impact measures
- Cool roofs with high reflectance.
- High efficiency heat pumps or VRF with variable speed.
- Smart thermostats and centralized controls.
- Low-e window film and targeted shading.
- Small battery systems that clip peaks on demand charges.
Action today
- Require contractors to provide kWh and kW savings estimates.
- Install measurement and verification on the first upgraded property.
- Use the measured savings to set standards for the rest of the portfolio.
How can investors adjust acquisitions in 2025?
Investors can screen markets by energy cost and heat exposure. Class B assets can be targeted with simple upgrade paths. Investors can underwrite incentives as upside rather than base case.
Acquisition steps
- Map cooling degree days with public datasets.
- Pull state energy rebates for your top five target metros.
- Add a line item for envelope and HVAC tune ups.
- Include a version that uses 179D and 45L alternatives.
- Include a version that uses only state energy rebates.
Action today
- Build an underwriting template with three energy cases.
- Share the template with your broker network.
What do lenders and insurers want to see?
Lenders want predictable cash flow. Insurers want risk controls that reduce claims. Both groups respond to documented mitigation.
Owner packet
- Energy benchmarking results for the last twelve months.
- Scope lists for envelope and HVAC upgrades.
- Proof of rebates, credits, and inspections.
- O&M plans for HVAC and controls.
- Peak demand graphs before and after upgrades.
Action today
Ask your insurer if any upgrades qualify for premium credits.
Send a one page summary to your lender relationship lead.
FAQs
What is a clean energy tax credit?
A clean energy tax credit is a federal incentive that reduces the tax burden for qualified renewable or efficiency projects.
Is the solar tax credit ending in 2025?
Some proposals seek to shorten or phase down the credit.
Owners should run scenarios that include a full credit and a zero credit case.
Can battery storage qualify without solar?
Some programs allow standalone storage to qualify.
Owners should confirm rules with a tax advisor.
What are 179D and 45L alternatives?
179D is a commercial energy efficiency deduction.
45L is a residential energy efficiency credit.
Both can apply when solar or storage credits are uncertain.
Where can I find state energy rebates?
Owners can use DSIRE to search for incentives by ZIP code.
Utilities and cities often list programs on their websites.
Should I pause projects due to uncertainty?
Many projects still pencil with state energy rebates and 179D or 45L.
A phased scope can protect ROI while preserving schedule.
