Race to July 2026: securing your PV safe harbour

As the July 2026 deadline approaches, developers should initiate safe harbour activity as soon as possible to identify and resolve these issues before manufacturer capacity and independent engineering availability become more constrained.

The regulatory shift

The landscape moved so fast this year that it felt like whiplash. The OBBBA Spending Bill and Executive Order 14315 effectively narrowed the path to safe harbour and changed the rules for wind and solar projects. With Notice 2025-42 eliminating the 5% test and the continuous efforts test, the physical work test is now the only pathway to safe harbour. With the added complexity of Notice 2026-15’s foreign entity guidance, the overall standard is higher, the language is stricter (shifting from work “begun” to “performed”) and the margin for error has disappeared ahead of the final July 2026 deadline.

What this means on the factory floor

The policy discussion has been well covered by law firms and the trade press. What hasn’t received much attention, because it requires being physically present at the point of manufacture, is what happens when an IE arrives on-site to document the physical work supporting a safe harbour claim.

From the end of 2024 to the beginning of 2026 Enertis Applus+ conducted over 80 safe harbour IE engagements covering more than 160 unique project sites, 2,628 individually tracked components and a number of manufacturers across the Americas, Europe and Asia. The bulk of the documented equipment involved consisted of generator step-up transformer sub-components – specifically 1,800+ radiators and conservator tanks. Less frequent ‘beginning of construction’ evidence included control enclosures, auxiliary racking, medium voltage transformers (MVTs), MVT radiators and auxiliary racking systems.

It was common for our team to find manufacturer-level problems that threatened the evidentiary chain that developers depend on for compliance.

Seven common traps found

Unlabelled components. Radiators, conservator tank walls and sub-assemblies arrive at the factory floor or staging area with no labels, no serial numbers and no way to tie them to a specific project. An inspector standing in front of an unlabelled radiator cannot confirm that work on a particular project’s equipment has been performed, regardless of how much physical work has actually occurred. These kinds of issues complicate an IE’s documentation of the manufacturer having followed the IRS guidance stating that a“reasonable method must be used to associate individual components with particular applicable facilities”.

Wrong project on the label. Work orders, purchase orders, and serial numbers inscribed on components do not consistently reference the correct project information. A component manufactured for one project but labelled for another breaks the traceability chain between the binding contract, the physical work and the project claiming the credit.

ERP blind spots. Many manufacturers’ enterprise resource planning (ERP) systems do not capture or timestamp the start of production for a given component, which can be as simple as a work order. This issue is a common occurrence with domestic manufacturers who have scaled rapidly to meet demand but have not upgraded internal systems accordingly.

Missing start-date evidence. Manufacturers produce completion records but not start records. Without documented verification of when the work began – something as simple as a First Article Inspection – manufacturers create a critical blind spot for compliance, making it difficult to prove that a “manufacturer’s work is done pursuant to a binding written contract”, as specified in Notice 2025-42.³

Design drawings dated significantly before or after claimed start. Engineering fabrication drawings that are generic, have a release date that precedes the contract by years, or have a release date sometime after the start-of-production date shatter the evidentiary chain. If the design basis for the work is from the distant past or did not exist at the claimed production start date, then it is difficult to establish if the work done was project-specific manufacturing and not from a supply of generic stock items.

Equipment inaccessible during verification. Inspection cannot be completed on components undergoing factory acceptance testing, those located in restricted areas, those already crated for shipment, or those not yet at the claimed fabrication stage when the IE arrives. In these types of cases, the IE visit must be rescheduled with consideration of a fixed deadline.

Seller-provided photographic documentation. When relying on seller-provided photographic documentation rather than an on-site inspection, owners should verify that the photographs correspond to the actual components purchased for the project. In some cases, the same component may be photographed multiple times with temporary labels applied for different projects.  

The 2025 rush and the coming 2026 surge

In the final months of 2025, the combined effect of the OBBBA, IRS Notice 2025-42 and anticipated prohibited foreign entity (PFE) restrictions triggered a stampede of safe harbour activity. Developers rushed to establish beginning-of-construction dates before 31 December 2025, not only to lock in domestic content thresholds and prevailing wage structures for the 2025 tax year, but also to avoid the uncertainties of foreign entity of concern (FEOC) requirements.

The result was a surge in verification demand. Manufacturers were pushed to accelerate timelines. Verification teams were deployed on compressed schedules. Every trap described above was amplified by the pressure to move fast. The rush did not create these problems, but it did intensify them and made resolution difficult.

The end-of-2025 rush may prove to be a preview. The 4 July 2026 deadline is a hard termination date, not a phase-down. Developers who haven’t already acted will soon find themselves competing for the same limited pool of manufacturers and verification providers within the same compressed window.

The sequence matters

A safe harbour claim under the physical work test is a sequence of interdependent steps that must be executed in order. A binding written contract must be in place before the physical work begins. This is a strict requirement under Notice 2025-42.

The manufacturer’s readiness to produce compliant documentation should be assessed before fabrication starts. Physical work must be performed on project-specific components, not off-the-shelf inventory. Independent engineering verification must document that work at the point of manufacture. And, a comprehensive documentation package must demonstrate an unbroken chain from contract to component to project.

Manufacturer readiness is a frequently skipped step. Developers execute the binding contract and assume the manufacturer will produce adequate documentation as a matter of course. Based on 80+ engagements, that assumption is often wrong.

What to do about it

• Engage independent verification early.

• Assess the manufacturer’s systems for documenting production starts and component labelling, as well as ensure that design drawings are revision-controlled for the specific project.

• Make documentation a contractual obligation, not a request.

• Coordinate verification scheduling and build in contingency.

The problems documented here are manageable when there is time to identify and resolve them. They become significantly more difficult when discovered in the last hour.

The time to begin is (hopefully, before) now.

With 13 years of PV industry expertise, James Whittemore is a senior manager of quality assurance and quality control (QAQC), technology and supply chain at Enertis Applus+. He is responsible for supporting the operations of QAQC/Vendor Inspection Services in the United States.