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The Physical Work Test is the primary method for establishing‘ beginning construction’ for solar projects over 1.5 MW AC. Project stakeholders can use both offsite work, which includes buying projectspecific equipment, and / or onsite work, which includes things like establishing service access roads, drilling piles, and laying foundations for equipment pads, to satisfy the Physical Work Test.
The Five Percent Safe Harbor remains a method of establishing start of construction for tax credit eligibility specifically for solar projects with maximum net power output of 1.5 MW AC or less.
How do you think developers can balance urgency to meet deadlines with quality workmanship? Based on our interpretation of the guidance and review of legal briefings from multiple law firms, work representing just two-tofive-percent of total project fair market value or capital cost can qualify if it meets the‘ significant nature’ criteria – but this is a general range and not a bright-line test. For those project developers unable to procure equipment in time, with conscientious planning, project developers and EPC contractors can still organize parallel onsite physical work activities to occur in an expedited manner while satisfying the Physical Work Test, as further discussed in our memo.
Large-scale utility projects unable to satisfy beginning of construction requirements by July 4, 2026 must be placed in service by December 31, 2027. To ensure these projects are constructed in conformance to project requirements and with good quality workmanship, we recommend owners carefully select EPC contractors with a proven track record and consider hiring a third-party technical advisor such as VDE to monitor construction.
As VDE Americas sits at the intersection of technical advisory and risk mitigation, where are you seeing the most stress right now? Equipment manufacturers have taken various steps in recent years to reduce the cost of their products: PV module glass is thinner and frames have less aluminum; tracker manufacturers are using shorter rails; and copper is replacing silver in some places while aluminum is replacing copper in others. Although these‘ improvements’ have contributed to reduced system cost, in some cases they have come at the expense of serial defects, premature failures, and underperformance, implying that the value engineering pendulum has swung too far. In other words, equipment manufacturers have sub-optimized their products to the detriment of system performance.
Fortunately, we’ ve also observed trends by some companies to consider a more holistic approach to PV system design that is more resilient. Back in 2020, virtually all single-axis solar trackers were designed to stow flat during wind events, minimizing steel embedment. However, after a series of high-profile utility-scale solar projects were destroyed by severe hail events, we worked with several tracker companies to help them evolve their products to be both wind and hail-resilient while also minimizing material costs.
What do you see as the greatest barriers to wider solar adoption, and how can we overcome these issues? There is a popular saying often attributed to labor activist Nicholas Klein:‘ first they ignore you, then they laugh at you, then they fight you, and then you win’. This might just be the story of solar energy. Within a generation, we’ ve come from being largely ignored to becoming the cheapest form of electricity commercially available. The dynamic regulatory environment created by
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