🔒CT businesses rush to start solar projects before federal tax credit expires

Connecticut’s commercial solar industry faces a blitz as businesses and developers scramble to launch projects before a July 4 deadline that dictates whether they may qualify for an expiring federal tax credit. The urgency prompted New Haven-based solar developer Jefferson Solar LLC to petition state regulators for expedited approval, warning of a “continuing assault on the construction of solar energy by the federal government.” The state Siting Council approved the company’s proposed 2-megawatt facility in North Branford at its Jan. 8 meeting. The federal Investment Tax Credit (ITC) has been around for decades and was established to spur renewable energy development. It allows commercial solar project owners to claim 30% of their installation costs as a federal tax credit. Now, under new rules enacted last summer under the One Big Beautiful Bill, projects must either begin construction by July 4, or reach full operation by Dec. 31, 2027, to qualify for the ITC — effectively setting an end date for the incentive. Developers are rushing to launch projects to capture the tax benefit before it disappears, industry experts said. “It’s kind of organized chaos right now,” said Mike Trahan, executive director of the Connecticut Solar and Storage Association.

Reshaping the market

Danielle Fidel, chief commercialization officer at Earthlight Technologies, said her company has been “completely slammed” helping businesses navigate the deadline. The Ellington-based solar developer doubled its contract volume in 2025 from a year earlier, driven largely by a second-half surge of customers seeking to secure the ITC, she said. Earthlight is adding sales and construction staff to meet rising demand. The company handles engineering, procurement and construction in-house and expects a major build-out this year as new contracts come in.

Much of the rush centers on federal rules that define when a project is considered to have started construction. For projects under 1.5 MW, businesses can qualify by spending more than 5% of total project costs rather than physically breaking ground. Larger projects must show on-site construction activity. To help clients meet that threshold, Earthlight uses a strategy known as “safe harboring,” Fidel said, which involves buying key equipment before the deadline.

“We’re taking 7% of the total project cost and purchasing safe harbor solar panels that we’re warehousing for them until installation, so that they can show that they have incurred at least the 5% for start of construction,” Fidel said. That approach gives businesses flexibility to work through lengthy regulatory approvals without losing access to the incentive. Among its recent work, Earthlight is developing a 372-kilowatt solar array paired with a 555-KW battery for East Hartford steel fabricator United Steel, with installation expected in late 2026 or early 2027. United Steel made a safe-harbor payment for solar modules, preserving its ITC eligibility, Fidel said. As solar developers push to advance projects before the deadline, some firms lacking the capital to start construction are selling or transferring projects to better-financed companies that can move quickly, industry officials said.

That dynamic is reshaping the market, according to Jenna Dobbins, head of marketing at West Hartford-based solar developer Verogy. “There’s been a consolidation of the marketplace, a shuffling around of projects, just to get them to that start of construction,” Dobbins said. Fidel said businesses considering solar may want to move soon if they hope to qualify for the federal tax credit, but noted projects can still be viable even if the deadline is missed. “If they’re not ready right now, it’s not as if solar is all of a sudden no longer going to make sense,” she said. “Solar is going to continue to make sense for businesses in Connecticut because of our high utility rates.”

Strong pipeline

The timeline for completing a solar development ranges from less than a year for simple rooftop projects to three to eight years for larger, more complex ground-mount installations. While the permitting process can take years, Dobbins said solar is still faster to deploy than other energy sources. In Connecticut, Verogy — which focuses on commercial, industrial and small utility-scale projects — has six projects totaling 26.9 MW actively under construction or recently completed. They include facilities in Glastonbury, Windsor, East Windsor, Stafford, Franklin and Woodstock. The company also has a 1.97-MW project in Willington pending before the Connecticut Siting Council, the state agency that reviews and approves most solar and other electric generating facilities larger than 1 MW. That proposal was accelerated to meet the federal deadline, Dobbins said. The state Siting Council has seen a spike in activity tied to the solar push, receiving about a dozen petitions for new projects in July and August 2025 alone, according to Executive Director Melanie Bachman. The council’s Jan. 8 meeting agenda included six commercial solar projects ranging from 0.97 MW to 4.65 MW. Beyond Connecticut, Verogy has nearly 200 projects in its national pipeline, Dobbins said.

State responds

Even as federal incentives wind down, Connecticut is continuing to back solar development as part of its long-term energy strategy. The state has a goal of becoming carbon free by 2040, but most of its electricity still comes from natural gas (about 60%) and nuclear power (roughly 33%), according to the U.S. Energy Information Administration. Solar accounts for only about 4% of in-state generation. Against that backdrop, state regulators are adjusting the timeline for the Non-Residential Renewable Energy Solutions Program, or NRES, to help businesses pursuing projects ahead of the July federal deadline. The program provides a key state incentive: 20-year utility contracts awarded through a state-run procurement program, under which Eversource and United Illuminating agree to buy electricity and renewable energy credits from approved solar projects at fixed prices. That long-term, predictable revenue stream helps make projects financially viable. In a Dec. 17 decision, the Public Utilities Regulatory Authority directed Eversource and United Illuminating to offer the entire 2026 NRES solicitation in a single February procurement round — instead of splitting it between February and August as in past years — aligning the state incentive schedule more closely with the federal tax-credit deadline. Eversource’s 2026 allocation includes 80 MW for small, medium and large zero-emission projects, plus an additional 20 MW for school solar projects. Companies do not need to participate in NRES to build solar or claim federal tax credits, but many pursue both to strengthen project economics. Solar developers supported the compressed procurement window, but Trahan said it creates another layer of complexity for businesses. “Winning developer bidders will have to move quickly for what may be twice the number of projects,” Trahan said. “Otherwise their customers will miss out on the federal tax credit.” To further offset the reduced federal support, PURA also increased the maximum prices utilities can pay for solar power under NRES by roughly 25% to 37% over 2025 levels. Small projects of up to 200 KW can receive as much as $250.42 per megawatt-hour, medium projects up to 1 MW can receive up to $236.74, and larger projects up to 5 MW can receive up to $182.94. Businesses that miss the February procurement will have future opportunities, as the state plans to continue the NRES program in 2026.

Looking beyond the tax credit

Developers say losing the ITC will raise costs in the short term, but not by the credit’s full 30% value. “It’s not like projects are going to get 30% more expensive,” said Fidel of Earthlight Technologies. Fidel, who has worked in solar for 17 years, said returns today — even without the tax credit — are stronger than when she entered the industry, largely because Connecticut utility rates have climbed. “Businesses have to protect themselves against those utility rate increases,” she said. Fidel added that financing could become simpler in a “post-ITC” market, as projects may no longer require complex tax-equity partnerships that match investors seeking tax credits with system owners. “Solar finance transactions get so much simpler when you don’t have to put tax equity partnerships together, and you don’t even think about the tax side of things,” Fidel said. “I do think that over time, it simplifies solar transactions tremendously to not have to rely on the ITC.” She noted that the cost of solar continues to fall relative to grid electricity, strengthening the business case even without subsidies. Companies that initially looked to solar for environmental reasons increasingly find the economics stand on their own. “While it seems like the sky is falling, the sky is not falling,” Fidel said. “We still have access to the most powerful source of energy out there with solar.”