Darin Lowder
Partner

Darin Lowder is a partner with Foley & Lardner LLP and a member of the firm’s Finance Practice Group, Energy & Infrastructure Sector, and Electrified Mobility Initiative. He focuses on energy and project finance, with experience in solar, wind, energy storage, electric vehicle infrastructure, and other energy technologies. He regularly advises clients on innovative financing structures, including tax credit transfers, public-private partnerships, and non-recourse project finance transactions.

Natalie Neals
Partner

Natalie Neals is a member of Foley & Lardner LLP’s Finance & Financial Institutions Practice and Energy Sector, where she focuses on project development and energy industry financing transactions. She represents companies, financial institutions, investors, and sponsors in the development, financing, construction, and operation of solar, wind, and other alternative energy projects. Her experience includes equity and debt financing structures, tax equity transactions, construction and term financing, syndicated and single-lender facilities, and other sophisticated commercial finance matters, including secured transactions and collateral issues.

Annie Tsai
Partner

Annie Tsai is a member of Foley & Lardner LLP’s Finance Practice, Energy Sector, and Environmental, Social, and Corporate Governance (ESG) Team, where she focuses on project finance and advising clients on the development, acquisition, and financing of renewable energy projects. She brings extensive electric power industry experience to her practice, including prior work with Southern California Edison’s Energy Procurement Group, where she supported portfolio optimization, power purchase agreement analysis, and regulatory matters related to renewable and conventional energy procurement.

US Renewable Energy Project Finance: Market Conditions and Key Developments

Introduction

The US renewable energy project finance market entered the second half of 2026 with surprisingly strong deal flow but a complex policy atmosphere that requires careful attention to some emerging critical issues. According to various measures, the renewable energy non-recourse project financing market has grown substantially. Greenfield debt financing grew 12% in the first half of 2026 to $59 billion, and is on pace to reach $143 billion for the full year, which would result in a 19% increase over 2025.¹Crux 2026 Mid-Year Market Intelligence Report (Aug. 18, 2026) Other estimates of similar growth include a 22% quarterly increase in clean energy investment between Q1 and Q2 2026, to a total of $75 billion in Q2 2026,²Rhodium Group / MIT-CEEPR Clean Investment Monitor, US Q2 2026 (Aug. 11, 2026) and forecasts of $70 billion in projected tax credit monetization for 2026 (including a doubling in preferred equity investment of $7.45 billion, up from $3.05 billion in 2025), up from an astounding $63 billion in 2025.³Crux 2026 Mid-Year Market Intelligence Report (Aug. 18, 2026) In addition, there are reports that North American project finance bank debt reached approximately $260 billion across roughly 500 deals in 2025, a 41% increase in lending volume. The likely driving factor for the dramatically increased financing activity was likely the July 4, 2026 deadline for beginning construction under the federal tax-credit regime. Longer-term demand is driven by data centers, artificial-intelligence infrastructure, and battery storage, in addition to other economic and general load growth factors.⁴Goodwin, Rachel, Ian Murdoch, and Jonathan Wiener. “Renewable Energy Financing: Navigating a Surge in Deal Activity.” Torys Quarterly, Summer 2026.

Policy Risks and Drivers

The One Big Beautiful Bill Act (OB3) accelerates wind and solar credit phaseouts and adds foreign entity of concern (FEOC) restrictions, while import tariffs raise equipment costs. Despite these challenges, the increases in project financings remains substantial. Some reports indicate that renewables made up 93% of US capacity additions through September 2025, with solar and storage accounting for 83%. The Renewable Energy Institute expects renewables and storage to represent 99% of new US electricity capacity in 2026.⁵Deloitte Research Center for Energy & Industrials. “2026 Renewable Energy Industry Outlook: Renewables Recalibrate for Resilience Amid Policy Shifts.” October 29, 2025; Renewable Energy Institute. “US Renewable Growth Continues into 2026.” 2026.

Although the July 4, 2026 beginning-of-construction deadline has now passed, those deadlines prompted sponsors, lenders, and tax-equity investors to accelerate, and in some cases, to “bring forward” financing and procurement decisions. Data-center demand reinforces the trend: By some estimates, hyperscaler capital expenditures exceeded $443 billion in 2025, with 2026 projected to be near $700 billion.

Battery storage is another durable support. The Renewable Energy Institute projects 33.8 GW of battery storage among US additions in 2026, and storage retains a longer tax-credit runway than wind and solar. That combination supports financing beyond the July 4, 2026 beginning-of-construction deadline, which has now passed.⁶Goodwin, Rachel, Ian Murdoch, and Jonathan Wiener. “Renewable Energy Financing: Navigating a Surge in Deal Activity.” Torys Quarterly, Summer 2026; Renewable Energy Institute. “US Renewable Growth Continues into 2026.” 2026.

During the past year, a number of occurrences and factors have helped shape the outlook for power generation and related financings. They include: (i) FERC’s show cause orders intended to accelerate large load interconnections, (ii) the restoration (with caveats) of the Five Percent Safe Harbor related to establishing the beginning of construction under Sections 45Y and 48E of the Code, (iii) the structural repricing of US power related to rising wholesale power prices and related power purchase agreement risks, (iv) the impact of the data center boom financing structures and considerations, (v) the importance of the focus on development-stage agreements to address tariff allocation, FEOC compliance, and beginning of construction considerations, and (vi) the importance of addressing open OB3 issues and FEOC matters.

FERC’s Six “Show Cause” Orders: Accelerating Large Load Interconnection

Foley & Lardner’s June 30, 2026 article, “FERC Issues Six Tailored ‘Show Cause’ Orders to Accelerate Large Load Interconnection,” describes a region-by-region response to surging demand from data centers, manufacturing, and other large users. On June 18, the Federal Energy Regulatory Commission (FERC) issued six orders under Section 206 of the Federal Power Act, directing each affected Regional Transmission Organization (RTO), Independent System Operator (ISO), and transmission owner to defend or reform its tariff. The orders cover areas serving about 200 million Americans and nearly two-thirds of load subject to FERC-jurisdictional rates.⁷Foley & Lardner. “FERC Issues Six Tailored ‘Show Cause’ Orders to Accelerate Large Load Interconnection.” June 30, 2026.

Rather than adopt one national rule, FERC found that existing tariffs may be unjust and unreasonable and required 60-day responses addressing five issues: faster study procedures; protection against cost shifting; rules for co-location and behind-the-meter generation; new services for flexible large loads; and procedures for generation serving nearby large loads. The approach leaves room for regional differences and for proposals under Section 205.⁸Foley & Lardner. “FERC Issues Six Tailored ‘Show Cause’ Orders to Accelerate Large Load Interconnection.” June 30, 2026.

The orders are prospective and are not intended to disturb existing commercial agreements. For developers and large-load customers, however, they may change study timelines, network-upgrade cost responsibility, financial-security requirements, and operating obligations. The regional design also matters. PJM Interconnection and the Southwest Power Pool received narrower directives because they already have large-load frameworks, while other regions face more open-ended reform. Foley’s practical takeaway is to engage early in the relevant region, monitor the 21-day intervention window, and track the open Advance Notice of Proposed Rulemaking (ANOPR) docket as compliance filings develop.⁹Foley & Lardner. “FERC Issues Six Tailored ‘Show Cause’ Orders to Accelerate Large Load Interconnection.” June 30, 2026.

Transmission owners and large-load customers also need to consider cost-recovery agreements and financial security. The orders do not impose immediate obligations on individual customers, but resulting tariffs could determine who pays for network upgrades and how quickly service becomes available. That is a financing question as much as a regulatory one.¹⁰Foley & Lardner. “FERC Issues Six Tailored ‘Show Cause’ Orders to Accelerate Large Load Interconnection.” June 30, 2026.

Five Percent Safe Harbor Restored—With Caveats

In its June 8, 2026 article, “Federal Court Vacates IRS Notice 2025- 42: Five Percent Safe Harbor May be Restored for Wind and Solar Projects,” Foley & Lardner explains that the US District Court for the District of Columbia vacated Notice 2025-42, issued by the Internal Revenue Service (IRS). The ruling restores, at least for now, the pre-Notice method of establishing “beginning of construction” by incurring at least 5% of project cost for covered wind and solar projects seeking credits under Sections 45Y and 48E. The court held that the agency had not adequately explained the change or addressed the industry’s reliance on longstanding guidance.¹¹Foley & Lardner LLP. “Federal Court Vacates IRS Notice 2025-42: Five Percent Safe Harbor May be Restored for Wind and Solar Projects.” June 8, 2026.

The case was remanded to the IRS and may be appealed. Although the July 4, 2026 beginning-of-construction deadline has now passed, developers should assess the Five Percent Safe Harbor against the Physical Work Test, preserve contemporaneous expenditure and construction records, and avoid treating the ruling as settled guidance. The timing of expenditures and the expected placed-in-service date remain central to that analysis.¹²Foley & Lardner LLP. “Federal Court Vacates IRS Notice 2025-42: Five Percent Safe Harbor May be Restored for Wind and Solar Projects.” June 8, 2026.

Rising Wholesale Power Prices and PPA Risk

Foley & Lardner’s analysis, “Rising Wholesale Power Prices: What Energy Buyers, Developers, and Lenders Need to Know About PPA Risk in 2026,” describes a structural repricing of US power. Wholesale prices in 2025 rose 62% in New York, 60% in New England, and 45% in PJM, reflecting higher natural-gas prices, tighter capacity markets, and grid constraints. Demand is also rising rapidly as data centers expand, manufacturing returns, and buildings and the transport sector electrify. The result is a market in which both price and timing risk matter more to renewable projects.¹³Foley & Lardner LLP. “Rising Wholesale Power Prices: What Energy Buyers, Developers, and Lenders Need to Know About PPA Risk in 2026.” May 6, 2026.

For renewable projects, the pressure is flowing into power purchase agreements (PPAs). The gap between buyer and seller price expectations has widened, solar capture rates are weakening as midday supply grows, and buyers are showing less appetite for long fixed-price commitments. Storage, shaped products, floor prices, and other protections can move output into higher-value hours and improve revenue visibility.¹⁴Foley & Lardner LLP. “Rising Wholesale Power Prices: What Energy Buyers, Developers, and Lenders Need to Know About PPA Risk in 2026.” May 6, 2026.

Those changes affect financing as well as contracting. Greater exposure to market prices can lead lenders to size debt more conservatively, require stronger hedge coverage, and scrutinize capacity-market revenues. The analysis should also reflect the project’s dispatch profile. A solar project that sells power without storage may have a different revenue profile from a hybrid project that can shift output into peak hours. The lesson is to structure the PPA, storage strategy, and financing together rather than as separate workstreams.¹⁵Foley & Lardner LLP. “Rising Wholesale Power Prices: What Energy Buyers, Developers, and Lenders Need to Know About PPA Risk in 2026.” May 6, 2026.

These issues are not limited to projects that sell power at market prices. A contracted project can still face a mismatch between its PPA terms and the market value of its output, particularly when the contract does not address output shape, floor prices, or negative pricing. Lenders will need to test those provisions against downside cases rather than rely on the headline contract price.¹⁶Foley & Lardner LLP. “Rising Wholesale Power Prices: What Energy Buyers, Developers, and Lenders Need to Know About PPA Risk in 2026.” May 6, 2026.

Financing the Data Center Boom

Foley & Lardner’s April 21, 2026 article, “Financing the Data Center Boom: Trends, Structures, and Considerations for Market Participants,” identifies data centers as one of the most active infrastructure-financing markets. A large campus can require billions of dollars for land, power infrastructure, fiber, cooling, and buildings. The article surveys four financing channels. Project finance can provide 60% to 80% loan-to-cost leverage when a purpose-built facility has a creditworthy anchor tenant and a long-term lease or colocation agreement. Private credit can fund construction, bridge, and mezzanine needs with faster execution and more flexible draw schedules, although at higher cost. Capital-markets debt and securitization can monetize stabilized portfolios, while joint ventures pair developer expertise with institutional equity.¹⁷Foley & Lardner. “Financing the Data Center Boom: Trends, Structures, and Considerations for Market Participants.” April 21, 2026.

The structures are not interchangeable. A bank-led facility may offer lower cost but require longer documentation and more conservative treatment of speculative capacity. Private credit offers speed but may be less liquid and more expensive. Bonds and securitizations require reliable reporting, disclosure, and a receptive market. Joint ventures can accelerate a pipeline but demand clarity on governance, capital calls, and exit rights. For established operators, corporate revolvers and term loans can complement project-level debt. The choice is therefore a capital-structure decision, not simply a question of finding the fastest source of funds.¹⁸Foley & Lardner. “Financing the Data Center Boom: Trends, Structures, and Considerations for Market Participants.” April 21, 2026.

Non-recourse expectations also require calibration. Because significant capital is spent before revenue begins, lenders may require completion guarantees, cost-overrun support, debt-service carry during construction and lease-up, or limited sponsor recourse until milestones are met. The size and duration of that support affect a sponsor’s ability to pursue other projects. Interest rates and construction duration also affect the relative value of each financing structure. A long construction period raises carry costs and can delay stabilization or refinancing. Credit review should focus on tenant credit, lease enforceability, termination rights, concentration, re-leasing prospects, interest-rate exposure, and construction duration. For a purpose-built facility, the anchor tenant is often the central credit fact; a vacancy can leave a highly specialized asset difficult to re-lease.¹⁹Foley & Lardner. “Financing the Data Center Boom: Trends, Structures, and Considerations for Market Participants.” April 21, 2026.

That risk profile is changing how projects are marketed and financed. Pre-leased campuses with investment-grade tenants can support project debt, but speculative capacity may face conservative sizing or remain reliant on sponsor capital until leases are signed. Private lenders may bridge that gap, while a bond or securitization may offer longer tenor once cash flows are established. Sponsors should model interest-rate, tenant, and re-leasing scenarios before selecting the structure.²⁰Foley & Lardner. “Financing the Data Center Boom: Trends, Structures, and Considerations for Market Participants.” April 21, 2026.

Project-Level Documents Take Center Stage

In its March 6, 2026 article, “Project-Level Documents Take Center Stage,” Foley noted that development-stage agreements have become major transaction documents rather than routine diligence items. Tariffs, FEOC rules, and tax-credit deadlines now affect project economics and lender reliance. Three provisions deserve close attention.²¹Foley & Lardner LLP. “A Foley Quick Hit: Project-Level Documents Take Center Stage.” March 6, 2026.

First, tariff allocation should be negotiated before procurement begins. Developers should model tariff scenarios and keep the allocation consistent across supply, engineering, procurement and construction (EPC), offtake, as well as financing documents. Common approaches include sharing increases, capping contractor responsibility, or allowing termination if costs exceed an agreed threshold. None of these structures is inherently superior. The right allocation depends on the project’s modeled economics, the contractor’s pricing position, and the lender’s tolerance for cost-overrun risk. Recent Section 232 measures and higher domestic-content requirements make early procurement and clear documentation more important, but the contract—not a headline tariff figure—should carry the analysis.²²Foley & Lardner LLP. “A Foley Quick Hit: Project-Level Documents Take Center Stage.” March 6, 2026; Goodwin, Rachel, Ian Murdoch, and Jonathan Wiener. “Renewable Energy Financing: Navigating a Surge in Deal Activity.” Torys Quarterly, Summer 2026.

Second, FEOC compliance must flow through the contract chain. Representations to buyers and lenders should be backed by supplier and contractor certifications, ownership disclosures, and remedies for noncompliance. Battery projects warrant special care because country-of-origin and ownership questions can reach deep into the supply chain. A weak efforts standard may leave the developer carrying the tax-credit risk.²³Foley & Lardner LLP. “A Foley Quick Hit: Project-Level Documents Take Center Stage.” March 6, 2026.

A representation alone may be insufficient. Suppliers may certify their ownership but decline to certify the full supply chain, or agree only to an efforts standard. That limitation can leave the developer exposed if a buyer or lender requires stronger assurance, particularly for battery energy storage systems (BESS) sourced through complex international chains. The negotiation should identify who will investigate, what evidence will be delivered, and who bears the loss if the credit is later denied or recaptured.²⁴Foley & Lardner LLP. “A Foley Quick Hit: Project-Level Documents Take Center Stage.” March 6, 2026.

Third, beginning-of-construction (BOC) records should be built into project documents from the outset. Supply agreements should require certificates identifying the exact date work began and supporting records, rather than a statement that work began before an estimated date. The same discipline should apply to prevailing-wage, apprenticeship, and domestic-content evidence when those requirements affect the credit strategy. A negotiation in which the supplier is required to amend its certificate to state the actual manufacturing date may result in a delay affecting tax-credit treatment and financing. The lesson is simple: secure the evidence while the supplier is still negotiating, not after execution.²⁵Foley & Lardner LLP. “A Foley Quick Hit: Project-Level Documents Take Center Stage.” March 6, 2026.

OB3 and FEOC: Critical Considerations for Debt Financings

Foley & Lardner’s March 16, 2026 article, “One Big Beautiful Bill (OB3) and FEOC: Current Considerations for Debt Financings,” identifies the new rules as a lending issue, not only a tax issue. For lenders, the result is a broader diligence perimeter. Eligibility may turn on equipment sourcing, ownership, contract rights, and evidence that must be preserved over time. The Act adds “prohibited foreign entity” (PFE) limitations—often discussed under the FEOC label—in three buckets: material-assistance limits on equipment from PFEs; effective-control limits where a specified foreign entity controls the project; and taxpayer-level limits that prevent a PFE from claiming the credit. Treasury’s interim Notice 2026-15 gives lenders a framework for the Material Assistance Cost Ratio (MACR), but leaves key questions open.²⁶Foley & Lardner LLP. “One Big Beautiful Bill (OB3) and FEOC: Current Considerations for Debt Financings.” March 16, 2026.

Those questions include how covered status travels through ownership chains and affiliations, how debt is attributed, and what “effective control” means in ordinary project contracts and financing arrangements. Notice 2026-15 provides a framework for calculating material assistance but does not resolve who falls within the covered-party rules or how contract rights will be treated. The uncertainty is most acute where a bridge loan is repaid from tax-equity funding or a credit sale, because a later reduction or recapture can leave the borrower liable to investors and purchasers.²⁷Foley & Lardner LLP. “One Big Beautiful Bill (OB3) and FEOC: Current Considerations for Debt Financings.” March 16, 2026.

The response is targeted diligence and drafting. Lenders are seeking ownership-chain reviews, borrower representations, counterparty certifications, beginning-of-construction compliance certificates, ongoing supply-chain records, and certifications made under penalty of perjury. They are also re-examining step-in rights, negative covenants, intellectual-property licenses, EPC terms, and supply agreements because contract rights can affect effective control. Where tax credits are sold or monetized, these protections also affect the borrower’s continuing obligations to tax-equity investors and credit purchasers. As a result, loan agreements are moving beyond generic tax covenants toward deliverables tied to procurement and beginning of construction. The “know or have reason to know” standard makes a credible compliance process as important as a signed representation.²⁸Foley & Lardner LLP. “One Big Beautiful Bill (OB3) and FEOC: Current Considerations for Debt Financings.” March 16, 2026.

Conclusion

Renewable energy finance is still growing, but the projects that close successfully will be those that convert policy, supply-chain, and power-market uncertainty into explicit contractual and financing protections. In 2026, the edge belongs to sponsors, lenders and investors that move quickly without sacrificing documentation thoroughness and precision, complete diligence, or regional execution discipline.²⁹Foley & Lardner. “FERC Issues Six Tailored ‘Show Cause’ Orders to Accelerate Large Load Interconnection.” June 30, 2026; Foley & Lardner LLP. “Rising Wholesale Power Prices: What Energy Buyers, Developers, and Lenders Need to Know About PPA Risk in 2026.” May 6, 2026; Foley & Lardner LLP. “One Big Beautiful Bill (OB3) and FEOC: Current Considerations for Debt Financings.” March 16, 2026; Foley & Lardner. “Financing the Data Center Boom: Trends, Structures, and Considerations for Market Participants.” April 21, 2026; Foley & Lardner LLP. “A Foley Quick Hit: Project-Level Documents Take Center Stage.” March 6, 2026.