Navigating clean energy incentives for higher education
CHICAGO, IL / ACCESS Newswire / October 16, 2025 / Authored by Baker Tilly's 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.
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 foreign entities of concern, setting new qualification deadlines and gradually phasing out select provisions. Many clean energy incentives remain in place, but with more limited windows of opportunity and stricter compliance standards. As a result, the urgency for educational institutions to start is great than ever.
How does the OBBBA affect higher education energy projects?
Solar
The Commercial Solar ITC under IRC Section 48E imposes a tighter construction window: schools must break ground by July 4, 2026, or bring systems online by Dec. 31, 2027, to secure funding. Fortunately, opportunities remain, but you need to get started to secure the solar tax credit funding.
Energy storage
A bright spot for institutions is in energy storage, an area that remains favorably treated under the OBBBA. The full ITC is still available for standalone battery storage systems through 2033, giving institutions ample time to plan campus-scale installations with robust federal backing. Even as solar incentives phase out, pairing energy storage with leased or safe-harbored solar systems may help offset cost impacts and sustain long-term sustainability goals.
Fuel cells and linear generators
Fuel cells, including linear generators offer a compelling opportunity under OBBBA as the incentives are built to last. Eligible fuel cell and linear generator systems that generate electricity now qualify for a base 30% ITC, offering a new option for distributed generation on campus with heat recovery where needed. Unlike solar and wind technologies facing early sunsets, fuel cells and linear generator projects remain federally supported if projects begin construction after Dec. 31, 2025, through the end of 2035.
Electric vehicles (EVs) and EV chargers
Colleges and universities considering alternative fuel vehicles to add to their fleet must move swiftly. Federal credits including the Commercial Clean Vehicle Credit (45W) and EV incentives (30D and 25E) expire after Sept. 30, 2025, while refueling infrastructure support under Section 30c ends by June 30, 2026.
Incentives in action: Our work on campuses
Baker Tilly has worked with numerous colleges and universities over the past few years, helping them take advantage of clean energy incentives for campus projects. Our energy and infrastructure team has helped these institutions understand their eligibility for clean energy tax credit funding and comply with myriad requirements needed to earn and keep these credits. This includes compliance with the prevailing wage and apprenticeship bonus credits (PW&A) requirements, domestic content bonus credit requirements and energy community bonus credit compliance requirements. Baker Tilly also helps guide institutions through the direct pay election process, allowing them to monetize tax credits as tax-exempt organizations. Our team also performs energy feasibility studies and cost segregation analyses to determine eligible property costs and optimize credit values. For example:
Baker Tilly is engaged with a major private university in the Northeast to secure federal clean energy tax credits for over $1 billion in energy initiatives, including geothermal and solar projects. Their planned solar installation generates approximately 1.9 megawatt-hours annually, covering around 17% of a key campus building's energy needs. Their campus-wide geothermal heating and cooling project will deliver ground-source thermal energy to meet more than half of the heating and cooling requirements for current and future buildings for a portion of the campus. These efforts support the university's sustainability and climate goals while enhancing energy infrastructure and reducing emissions by over 15%.
Baker Tilly is helping a private college in the Midwest to secure federal clean energy tax credits for a roughly $7 million thermal energy storage initiative. The project involves installing a thermal storage tank to shift electricity usage from daytime to nighttime, which helps reduce costs and lower demand charges by balancing energy consumption. Baker Tilly is supporting the college through the pre-construction phase by evaluating eligibility and ensuring compliance with tax credit requirements. The team will continue assisting through commissioning to help maximize and substantiate the credit, including adherence to PW&A standards for final tax filings.
Act now! What should your institution do next?
Assess your energy project pipeline
Identify capital projects that could qualify for OBBBA-related credits, grants or financing mechanisms
Update your facilities and finance teams on funding opportunities
Ensure that key internal teams are informed about the OBBBA provisions and prepared to act quickly as funding opportunities and compliance requirements emerge
Baker Tilly can help
At Baker Tilly, we work closely with higher education institutions to navigate aging infrastructure, sustainability commitments and the rising costs of energy and capital planning. Engage with Baker Tilly's specialists for current insights on energy tax credits and clean energy policy. We'll help you asses project effects, document key construction dates and secure existing IRA benefits to reshape your campus's energy future before changes take hold. Connect with an IRA specialist today.
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View the original press release on ACCESS Newswire:
https://www.accessnewswire.com/newsroom/en/business-and-professional-services/how-the-obbba-impacts-your-institutions-energy-projects-1087660
