Rulings in Maryland and Oregon Offer New Pathway to Access Clean Energy Tax Credits

Oregon and Maryland recently took important steps to expedite the process for clean energy projects to connect to the grid, to help ensure that delays in this process do not prevent projects from qualifying for expiring federal tax credits. Oregon and Maryland became the nation’s second and third states, respectively, to implement “phased interconnection” policies. Both states established emergency rulemaking proceedings earlier this year to support clean energy projects in qualifying for federal tax credits that are ending as a result of the One Big Beautiful Bill Act (OBBBA), by streamlining and removing barriers in the development process. Maryland’s revised interconnection rules went into effect on May 12, and Oregon’s are effective as of April 1.

OBBBA, which was signed into law on July 4^th, 2025, rapidly accelerated the end dates of the Residential Clean Energy Tax Credit (Section 25D) and Investment Tax Credit (Section 48E). While the Residential Clean Energy Tax Credit was terminated on December 31^st, 2025, the Investment Tax Credit is set to expire on December 31^st, 2027. To qualify for that tax credit, projects must meet IRS “placed in service” requirements; this is typically demonstrated through a utility’s issuance of permission to operate (PTO) by that date. Delays in the interconnection process, such as extended construction timelines for required grid upgrades, could cause projects to miss that deadline, creating significant financial risk for customers counting on those credits.

When grid upgrades are required for a clean energy project to connect to the electric grid, those upgrades often take months or years, during which time the project cannot begin operation. “Phased interconnection,” also called temporary permission to operate (T-PTO), provisions allow projects to begin operation on a temporary or limited basis while awaiting completion of required grid upgrades. As a result, phased interconnection provides a pathway for projects to demonstrate “placed in service” status earlier, increasing the likelihood that they can qualify for tax credits before they expire.

Phased interconnection is a new concept for electric generating projects that connect to the distribution grid. Until now, it has only been implemented in the District of Columbia, which adopted the approach in December 2025. The Interstate Renewable Energy Council (IREC), an independent nonprofit that participates in state regulatory proceedings, has been influential in advancing the concept of phased interconnection and was active in the related proceedings in the District, Maryland, and Oregon.

Maryland and Oregon took different approaches to the design of their phased interconnection provisions. Maryland’s new policy allows projects that require a grid upgrade to receive T-PTO if they sign a temporary limited export agreement or temporarily operate in non-export mode. Utilities must provide T-PTO to the customer within 20 business days of receiving the required documents and approvals. Once the necessary grid upgrades are completed, the project can transition to full-capacity operation. In Oregon, if the utility determines that grid upgrades will not be completed within the standard 600-day construction timeline set by the Commission’s ruling, the customer can request further study to determine if the project can operate in a limited capacity. After the study, the project can receive official approval to operate at a specified level of export determined in the study results. As in Maryland, once upgrades are completed, the project can transition to full-capacity operation. 

David Golembeski, IREC Senior Program Manager, praised the actions. “At a time when grid upgrades are increasingly prevalent, phased interconnection gives customers and utilities flexibility to allow projects to begin operation quicker, unlocking additional grid capacity while avoiding unnecessary delays. IREC applauds Maryland and Oregon for leveraging phased interconnection to support tax credit access for clean energy projects, and urges regulators to make phased interconnection a permanent fixture of their state’s interconnection process.”

Dexter Hendricks, Senior Manager, Interconnection Policy, at the Coalition for Community Solar Access (CCSA), also expressed support for the rulings, noting that “Maryland and Oregon are taking important steps to expedite interconnection processes to keep clean energy projects moving at this critical time. By adopting phased interconnection provisions, both states are enabling projects to move forward while grid upgrades are completed. This approach offers a clear model for other states looking to ensure that interconnection bottlenecks do not prevent otherwise viable projects from meeting ITC qualification deadlines.”

“By enabling temporary operation and expanding flexible interconnection options, Maryland and Oregon are helping critical solar and storage projects to move forward while longer-term grid upgrades catch up,” said Kevin Lucas, Vice President of Policy Analysis for the Solar Energy Industries Association. “Other states should embrace this phased interconnection approach to ensure that urgently needed solar and battery energy storage projects can come online and help lower costs for Americans as quickly as possible.”

Both states’ phased interconnection policies emerged from emergency rulemaking proceedings established in response to OBBBA. Under these expedited processes, the Commissions were able to cut several months off the normal rulemaking process. Under the emergency process, the new rules are temporary and are “live” until early September in Oregon and until October in Maryland unless they are adopted through the normal rulemaking process, at which point they will become permanent.

Maryland, Oregon, and the District provide a model for other states seeking to help ensure clean energy projects do not miss out on tax credits due to delays. Beyond these short-term goals, phased interconnection holds significant promise as a long-term interconnection solution. Additional benefits of this approach include helping projects to meet deadlines associated with state programs or incentives, mitigating risks related to project financing requirements, and/or improving project economics by enabling earlier operation and revenue generation. As a result, phased interconnection can provide significant near- and long-term value to solar developers, residents, and businesses.

David Golembeski

As a Senior Program Manager for IREC’s Regulatory program, David focuses on improving rules, regulatory policies, and technical standards to make clean energy widely accessible and develop a state-of-the-art electric grid. He previously worked on the IREC-led SolSmart program, which provides local governments nationwide with no-cost technical assistance to help streamline their solar permitting, inspection, and zoning policies.