The Interconnection Agreement Loophole Under New ITC Rules

The solar energy industry finds itself in uncharted territory. The "One Big Beautiful Bill" (OBBB) has introduced substantial changes to the Investment Tax Credit (ITC), accelerating its phase-out for commercial and utility-scale projects. Developers who previously operated on extended timelines or flexible milestones now face tightened deadlines that require swift and strategic planning to preserve any remaining federal incentives.

This shift has turned interconnection progress into a key signal of whether a project is realistically on track. To support that, LandGate is adding new visibility into the interconnection agreement (IA) status within PowerTools. Projects in the queue will now display whether their IA is approved, pending, or withdrawn. This information is surfaced directly in project details and available as a filter to help users hone in on actively progressing opportunities.

A signed interconnection agreement doesn't guarantee ITC eligibility or construction readiness, but it can be a strong indicator that a project is advancing. Still, it’s important to note that many projects with signed IAs may face delays from permitting hurdles, financing uncertainty, or supply chain challenges. On the other hand, pending or withdrawn IAs often suggest projects are less likely to meet the ITC deadlines. This added context helps differentiate real capacity from speculative queue backlog.

Shifting ITC Deadlines and the Importance of Interconnection

With the OBBB’s new restrictions, solar projects must meet one of two critical criteria to qualify for ITC benefits:

1. Start construction by July 4, 2026: Projects made eligible under this rule qualify for the full ITC.

2. Placed in service by December 31, 2027: Projects must become operational within this window if they fail to meet the earlier starting requirements.

These deadlines have heightened the importance of interconnection progress. While not sufficient alone to establish ITC eligibility, signed interconnection agreements signify that a project is advancing and nearing the all-important “beginning of construction” (BOC) milestone. However, identifying viable projects with IAs has always been a labor-intensive and complex effort. This is where search tools with enhanced IA tracking provide a game-changing solution.

Why Interconnection Agreements Are Keys to ITC Eligibility

Interconnection agreements represent a significant milestone in solar project development. They indicate that a project has passed through early feasibility studies and is poised to move into construction. While an IA alone doesn’t qualify a project under ITC rules, it provides essential groundwork for pivotal development activities like:

1. Ordering Long-Lead Equipment: Contracts for components like solar modules and inverters often begin following IA approval, helping satisfy the 5% Safe Harbor Test.

2. Site Preparation: Grading, foundations, and other early-stage construction work can proceed with confidence once interconnection hurdles are resolved.

3. Financing and Permitting: Projects with signed IAs attract stronger interest from investors, lenders, and local regulators, enabling faster progression toward completion.

Conversely, projects with pending or withdrawn IAs often suggest delays or lower feasibility, helping developers rule them out of future plans. Specialized search tools that provide IA visibility enable developers to hone in on truly viable opportunities while adding efficiency to their pipeline strategy.

How Advanced Search Tools Simplify Project Screening

Platforms like LandGate’s PowerTools have revolutionized how developers locate solar opportunities by integrating IA data directly into their search processes.

LandGate also shows exactly which substation each queued project is proposed to interconnect with. This detail alongside key data points like queue submission date, study stage (FES, SRIS, FS), requested MW, point of interconnection (POI), and available transfer capacity at the substation gives a far clearer sense of whether a project is technically and commercially viable under current policy constraints.

These updates give users a more complete picture of the queue; not just who’s in line, but who’s making forward progress. Whether you’re screening for acquisition targets, identifying viable interconnection locations, or assessing shifting risk profiles, this functionality helps connect the dots between queue data and real-world project timelines.

Here’s what these tools offer:

Visibility into Interconnection Status

Beyond simply showing which projects are in the queue, platforms now display whether an interconnection agreement is:

1. Approved

2. Pending

3. Withdrawn

   
   

This distinction allows developers to filter out speculative or stalled projects with ease, increasing focus on initiatives capable of meeting looming ITC deadlines.

Comprehensive Interconnection Data Points

Essential project-specific details are included, such as:

1. Queue Submission Date: How long the project has been in the queue.

2. Study Stage: Progress through Feasibility Study (FES), System Reliability Impact Study (SRIS), and Facilities Study (FS).

3. Proposed Point of Interconnection (POI): Exact substations or grid nodes where interconnection is planned.

4. Available Transfer Capacity (ATC): How much capacity remains unused at the substation level.

   
   

Tailored Filtering Options

Developers can sort projects by attributes like geographic location, requested megawatts (MW), or permitting status. For instance, projects with high queue backlog or inadequate ATC can be deprioritized to avoid wasting resources.

Real-Time Updates

Interconnection data changes frequently due to refinements in project studies or policy adjustments. Search tools that deliver real-time updates ensure developers remain agile and informed in fluid conditions.

Beyond Interconnection Data: Navigating New Safe Harbor Rules

Developers must act quickly to convert promising IA-backed projects into fully compliant ones. Here are actionable strategies:

Accelerate "Beginning of Construction" Milestones: Using tools like PowerTools, identify projects with executed IAs and immediately initiate activities counted under IRS rules for BOC, including physical site work or equipment prepayments.

Secure Long-Lead Components: Many ITC-eligible activities, such as placing binding orders for major solar infrastructure, can commence immediately after signing interconnection agreements. Ensure compliance with IRS’s 5% Safe Harbor Test by keeping invoices and contracts readily accessible as proof of progress.

Conduct Due Diligence on Acquisition Targets: Projects already approved for interconnection but struggling financially may present acquisition opportunities. Leverage IA data to evaluate their technical and economic feasibility, factoring in study timelines and estimated upgrade costs. These can also serve as strategic M&A targets for a faster entry point into high demand regions without waiting through full interconnection study cycles.

Engage Local Stakeholders: Securing site-specific permits and community buy-in are crucial for avoiding delays. Use interconnection locations as a springboard to initiate relationships with local governments, landowners, and power purchasers.

Streamline Financing Applications: Projects that advance beyond interconnection benefit from reduced risk profiles, making them more appealing to investors. Use IA data to present financiers with clearer timelines and projected returns.

Staying Ahead in a Rapidly Evolving Landscape

While interconnection agreements are not the sole indicator of a project’s readiness, tools that surface this data are indispensable in 2024’s solar market. Transparency around IA status reduces uncertainty, helps developers prioritize feasible opportunities, and ensures faster alignment with shrinking ITC windows.

By adopting search platforms that integrate IA tracking, developers can stay ahead of grid congestion patterns, minimize development bottlenecks, and act strategically on time-sensitive opportunities. These tools not only de-risk projects but also position solar companies to remain resilient in an increasingly competitive industry.

Accessing the Interconnection Agreement Loophole for ITC

The countdown to preserve ITC eligibility has already begun. Don’t fall behind as policy changes reshape the renewable energy landscape. Equip your team with the insights they need to succeed.

As interconnection processes evolve and guidance around ITC eligibility becomes more defined, this added layer of visibility will be essential to staying ahead on both the policy and grid sides of the equation..

Interested to learn more? Schedule a demo with us to see how IA tracking from LandGate can elevate your solar development strategy.