June 3, 2026
Since Congress passed the so-called One Big Beautiful Bill Act (OBBBA) last summer, the solar industry has been focused on looming deadlines to meet requirements for expiring tax credits. An important part of that process is safely storing materials and supplies for upcoming projects. In this episode of Power Forward! Solar Builder editor Brad Kramer speaks with Travis Walker, director of business development at BayWa re, who explains everything solar installers need to know about safe harbor programs in 2026.
- 00:50 Safe harbor overview and upcoming deadlines
- 02:05 What if you miss the deadline?
- 02:46 Insight into percentages and eligible expenses
- 04:08 Demonstrate the start dates of project construction
- 06:14 How does the IRS define work of a substantial nature?
- 08:24 Necessary documentation for a safe haven
- 09:17 Importance of interconnection and permits
- 10:25 Key considerations for solar installers on safe harbor projects
Understanding Safe Harbor Deadlines
Kramer: What does it mean to secure a solar project, and what deadlines should installers face for 2026?
Hiker: Safe shelter is essentially a way of recording construction, saying that construction has begun by that date. For example, July 4 is the deadline to take out your safe haven. After the 4th of July you cannot sail safely. It basically means that I started construction on the 4th of July, without actually picking up a shovel and actually digging and doing any substantial construction. Because you could. You could do some substantial construction. You could dig some ditches and… [install] racks, rails and panels. You could do that, and it has the same effect as safe harbor.
Kramer: What if companies miss the July 4 deadline?
Hiker: If you miss the 4th of July, it’s not over yet. The ITC actually expires at the end of 2027, so you still have some time to complete a project. You can complete a project from now until 2027 to still receive the ITC. The safe harbor holds you to domestic content percentages as they apply in that specific year. So for this year, 2026, you’re stuck with 50%. If you were to complete the projects in 2027, it would be under those rules if you didn’t save the port, and that would require 54% domestic content.
Eligible expenses for safe havens
Kramer: Can you tell us something about the 5% rule and what qualifies as eligible expenditure?
Hiker: While the IRS is talking about eligible expenses, you can’t say, I have these panels that were sitting in my warehouse that represented 5% of the project cost. They were already there. No, it has to be something new to the project. Often what people do is safe haven material. And the reason they keep material safe is because the material has tracking numbers. It has serial numbers. This way you know when that product was made and you can link it to specific jobs. The 5% rule is that 5% of my cost of the total project has been spent by X date. Again, I’m going to say 5% of the total cost of the project. What we often hear is that I want to put a 5% deposit on the materials, but it is not 5% of your material costs. It amounts to 5% of the total cost of the project. Equipment isn’t the only way you can spend that money, but it’s one of the cleanest, trackable ways you can spit out that spend.
Kramer: How does an installer demonstrate the start of construction, and which projects can still use the 5% rule?
Hiker: Construction may begin [demonstrated] in different ways. You can actually start building. You can take a shovel, you can start digging, you can start laying the rail, you can do a lot of things, and that would be considered starting to build. With Safe Harbor, you can start construction because you have spent 5% of the project cost. It basically means, “Hey, I’ve spent a significant amount of money on this project. If you made me stop it now or if you didn’t give me the ITC benefit based on that tax year, that would be unfair because I’ve already spent 5% or more on the project.”
Kramer: What type of documentation should installers and developers maintain to prove safe harbor eligibility? What project steps must be completed before the safe harbor strategy can be implemented?
Hiker: You will need to be able to prove that you are not operating based on your current inventory if you are trying to claim that you have begun your work, and then provide evidence that supports that continuation in some way. From the vendors, some type of documentation that makes you feel comfortable that it meets the FEOC and/or domestic content requirements set out for you.
Key points for installers
Kramer: What are three important things solar installers need to know about safely housing their projects?
Hiker: Don’t miss the 4th of July. I can’t shout that loud enough from the mountain tops. I talk to our sales team here at BayWa a lot, and I think you’re doing your installers a disservice if you don’t have a conversation with them now about safe harbor and what their plan is after the 4th of July. Let’s make sure everything is clear for every installer. If you don’t reach the safe harbor before July 4, after 2027, how can you win a job against someone who does have the safe harbor?
The physical work test is something that you must be able to prove. There are several ways to prove that you have started the project. So make sure you have taken the right steps. Understand that inventory doesn’t count. Prior actions in the field of interconnection or permits do not count.
Finally, make sure you understand all your gateways in terms of domestic content rates, MACR rates, and thresholds. Do you understand how they apply to your specific project? Make sure you do that as it will help you plan your business plans for 2028 and beyond.
Tags: BayWa re, domestic content, FEOC, investment tax credit, ITC, Power Forward!, safe harbor
