Article

How the OBBBA impacts your institution's energy projects

Navigating clean energy incentives for higher education

Sept. 16, 2025 · Authored by Gideon Gradman, Michelle Isenhouer Hanlin, Shristhi Negi, Valerie Nubbe

Explore how the One Big Beautiful Bill Act (OBBBA) reshapes IRA tax credit access and accelerates the timeline for action for your campus.

As higher education institutions across the country continue to grapple with aging infrastructure and sustainability commitments, the energy incentives in the Inflation Reduction Act of 2022 (IRA) have been a vital tool in making clean energy projects financially feasible. By reducing upfront costs for solar, battery storage, central utility plants and other clean energy technologies, the IRA has helped institutions improve infrastructure resiliency and advance sustainability goals while preserving capital. The IRA made sure these benefits were accessible to tax-exempt institutions through the direct pay provision of the law, allowing not-for-profits to receive the Investment Tax Credits and/or Production Tax Credits (ITC/PTC) as a refundable cash payment not previously available to tax-exempt organizations, a game changer for higher education.

This article outlines how the OBBBA affects energy-related projects within higher education, what changes to the federal clean energy tax credit programs mean in practical terms and how institutions can act swiftly to maximize remaining benefits before available credits phase out.

What is the One Big Beautiful Bill Act?

On July 4, 2025, President Trump signed the sweeping tax reform and spending reconciliation bill known as the One Big Beautiful Bill Act (OBBBA) into law. While the legislation addresses a broad range of issues, it notably revises several energy tax incentives introduced under the IRA. As one of the most consequential amendments to the IRA, future credit claimants have been busy trying to understand how these statutory changes interact with existing guidance.

The OBBBA preserves the direct pay option, ensuring that colleges and universities can still access clean energy incentives directly. However, it also accelerates the phase-out of certain tax credit funding provisions for clean energy power generation projects, narrowing the window for higher education institutions to benefit. Institutions can still take advantage of funding opportunities for projects like solar energy and geothermal energy installations, but timing is critical. Those institutions with projects underway should move quickly, while others may need to identify new clean energy projects this year if they want to utilize their benefits.

Furthermore, the legislation narrows access to certain benefits by imposing more restrictive rules on involvement with