The 2027 Solar Deadline: How Businesses, Nonprofits and Farms Can Still Own Solar While the Federal Credit Lasts

Businesses, nonprofits, farms and tribes are asking the same question this fall: is it still worth going solar? For many, the answer is yes. But for the first time in years, the calendar matters as much as the price of panels.

Under federal tax law, most commercial solar projects that began construction after July 4, 2026 must be placed in service by December 31, 2027 to qualify for the federal solar investment tax credit (Section 48E). The homeowner solar tax credit (Section 25D) already ended for expenditures made after December 31, 2025. That leaves businesses, nonprofits, farms, tribes and other organizations with roughly 14 months to get a project designed, approved, built and interconnected with Permission to Operate (PTO) received.

That is enough time, but not much room for delay. Here is what owners and the installers who serve them should be doing now.

Why the deadline is closer than it looks

A commercial project is not finished when the contract is signed. Between signature and "placed in service" site assessment, engineering, permits, utility interconnection review, equipment procurement and construction. Interconnection alone can take months in many utility territories, and equipment lead times can stretch when demand spikes before a deadline.

Work backward from December 31, 2027 and the practical window to sign a contract for a mid-size project closes well before then. Owners who start in the spring of 2027 will find themselves racing the utility, not the installer.

What owners should do now

1. Decide how you want to own it

Buying the system outright or with financing lets you keep the energy savings and claim the credit yourself. Nonprofits, tribes and local governments may be able to receive the credit as a direct cash payment (often called elective pay or direct pay) instead of a tax reduction. A power purchase agreement or lease can make sense when you can't use the credit, but you give up ownership and some of the long-term savings. Ownership is usually the better deal if you can manage it.

2. Get your tax advisor involved early

Eligibility depends on your situation, including equipment sourcing rules that took effect in 2026 and requirements that can affect the size of the credit. Ask your CPA or tax advisor to confirm your eligibility and timing before you sign, not after the system is built.

3. Get your site ready

Check the age and condition of the roof, and whether you need landlord or lender consent. If the system will go on land you lease, make sure the lease allows it. Ground-mounted systems on farms may need zoning or land-use approvals that take time.

4. Ask about interconnection on day one

Ask every installer you talk to how long interconnection is taking with your utility right now, and what happens if the utility is late.

5. Put the schedule in writing

Your contract should spell out the project schedule, what happens if a milestone slips, who bears the risk of delays outside anyone's control, and how change orders are approved. A clear contract protects both you and your installer when everyone is moving fast.

What installers should do now

The next 14 months are a real opportunity to help more owners go solar. They also bring more risk, because customers who miss the deadline may look for someone to blame. A few documents make a big difference.

Lock in the customer while you finish the design

Commercial deals take time to finalize, and a customer under deadline pressure may shop your proposal. A Letter of Intent (LOI) for Solar System Purchase creates a binding commitment, with confidentiality and non-circumvention terms, while you work out the final agreement.

Use a commercial contract built for commercial risk

Commercial projects bring bigger dollars and bigger exposure. Your installation agreement should cover scope of work, change orders, payment milestones, warranties, limitations of liability and indemnification. It should also make clear that the customer is relying on its own tax advisor, and address delays caused by the utility or the permitting agency. See the Commercial Solar System Installation Agreement (CA) or the generic version for other states. Adding batteries? See the Commercial Solar-Plus-Storage Installation Agreement (CA) or the generic version.

Keep the systems producing after the rush

Every system you install before the deadline needs care for the next 25 years. An Operation and Maintenance (O&M) Agreement protects the owner's production and return, and gives your company steady recurring revenue long after the tax credit is gone.

Get the core set and save

The Solar Legal Starter Kit for California and the Solar Legal Starter Kit bundle the commercial installation agreement, the LOI and other core contracts for less than buying them separately.

The bottom line

The federal credit has helped make direct ownership of solar possible for thousands of businesses, nonprofits and farms. It is not gone yet. Owners who start now, and installers who are ready with clear contracts, can still get projects built in time.

Have questions about your project or your timeline? Join the conversation in the Avanti Cleantech Community, where owners, installers and advisors share what is working.

This article is general information, not legal or tax advice. Tax credit rules are complex and change often. Talk with your tax advisor about your specific situation.