Three business days after the July 4, 2026 begin-construction deadline, the physical-work pathway on the announced solar safe-harbor pool has closed with the kind of documentation profile that reads as low-audit-risk in a 2029 to 2032 examination cycle. The 5-percent cost-incurred pathway has closed higher than the pre-deadline wire count suggested. And the fraction of that pathway using the 3.5-month rule to defer payment into Q1 2027 has entered the counterparty-risk window that was flagged in the July 3 pre-deadline note. The pool is now sitting in the four-year continuity-of-construction cycle, and the intra-pathway gradient that tax-equity had not repriced going into the weekend remains largely unpriced through Tuesday’s close.
What the pathway mix actually looks like
The announced solar safe-harbor pool that ran into the July 4 deadline came in at roughly 228 GWdc, at the upper end of the 216 to 240 GWdc pre-deadline range tracked through SEIA and Wood Mackenzie procurement data. Physical-work BOC took approximately 62 percent of the pool, or 141 GWdc, which is squarely inside the 60 to 70 percent pre-deadline expectation. The 5-percent cost-incurred pathway landed at 32 percent, or 73 GWdc, which is above the 25 to 30 percent pre-deadline estimate by roughly 4 to 6 GWdc. The residual 6 percent, or 14 GWdc, is on hybrid pathway documentation. The upside surprise on the cost-incurred share is concentrated in the last 96 hours of origination, where post-vacatur EPAs on modules and trackers came through faster than the June 6 to July 1 pace had implied.
The upside on the cost-incurred pathway matters for two reasons. First, the pathway is the documentation-heavier half of the pool. A 4 to 6 GWdc lift in absolute size expands the audit-surface acreage roughly proportionally, because the audit-defensibility question resolves on a per-project basis rather than a pool-wide basis. Second, the upside is concentrated in the exact cohort the July 3 note flagged as gradient-heavy: post-vacatur EPAs with tighter deposit ratios and higher use of the 3.5-month payment deferral.
Physical-work: closed clean
The physical-work pathway on the 141 GWdc took its documentation stack through Thursday July 2 and Friday July 3 module staging events, tracker foundation drilling milestones, and transformer delivery-to-POI moves. The photograph-and-timestamp documentation profile on physical-work is a materially cleaner audit surface than the cost-incurred contract-and-payment profile. The Q3 2026 audit-preparation cycle on the physical-work cohort will run through routine documentation packaging, without the interpretive layers that cost-incurred filings carry. Tax-equity yields on the physical-work pathway did not widen through the deadline weekend, and the primary market on physical-work-collateralized transferability paper is quoting inside the pre-deadline range.
The one specific documentation question on the physical-work cohort is on the customs-bonded warehouse subset. Approximately 34 percent of the physical-work pool documented BOC through module staging at customs-bonded facilities, which is a legally valid physical-work event but requires the taxpayer to demonstrate that the modules staged were the modules ultimately installed. The traceability chain from bonded-warehouse staging to eventual project installation runs three to four intermediate steps, and the 2029 to 2032 audit cycle will test the chain. The traceability question is a discrete audit item, not a pathway-level risk, but it is the specific documentation task the physical-work cohort should be closing out through Q3 and Q4 2026.
Cost-incurred: paid-at-execution is clean, Q1 2027 payment cohort is on the clock
The 73 GWdc cost-incurred pathway divides on the payment-timing axis. Roughly 41 GWdc, or 56 percent of the cost-incurred pool, paid the 5-percent deposit at contract execution before July 4 midnight. That cohort has met the economic-performance requirement under Section 461(h) as of the deadline. The documentation stack on the paid-at-execution cohort reads audit-clean, assuming the underlying EPA is genuinely binding under state contract law and the deposit was not a related-party recycle. Both conditions appear to hold across the majority of the paid-at-execution cohort based on the underwriting review flowing through tax-credit insurance markets.
The remaining 32 GWdc, or 44 percent of the cost-incurred pool, is using the 3.5-month rule to defer payment into Q1 2027. The 3.5-month rule under Section 461(h)(3) permits payment to occur within 3.5 months of the tax-year end for the cost to be treated as incurred in 2026, which pushes the payment deadline to mid-April 2027. For a July 4, 2026 begin-construction date, the specific hard payment deadline is April 15, 2027, or the developer’s tax-year-end plus 3.5 months if the developer runs a non-calendar tax year.
The counterparty-risk window on the 32 GWdc payment-deferred cohort is now a dated window. It runs from July 5, 2026 to April 15, 2027, which is 285 days. Two categories of event within that window would put specific cohorts under liquidity pressure. First, a supplier-side event: if a module or tracker supplier holding a portion of the deposit obligations enters financial distress before Q1 2027, the developer counterparty faces a specific-performance question that would need resolution before the April 15 payment date. Second, a developer-side event: if a developer’s project-level financing rolls off or if a portfolio-level tax-equity commitment gets restructured before Q1 2027, the deposit obligation becomes a live liquidity call at a moment when the developer may not have committed capital to fund it.
The 32 GWdc payment-deferred cohort is concentrated in the seven largest developers that carry the majority of the cost-incurred pool. That concentration means a single supplier-side or developer-side stress event could put 4 to 7 GWdc of payment-deferred documentation under specific-performance review simultaneously.
Related-party structure: dense paper trail, still legal
The June 6 vacatur of Notice 2025-42 permitted related-party EPAs to re-enter the cost-incurred pool in the last four weeks of origination. The final wire count on related-party structure inside the cost-incurred cohort came in at roughly 14 GWdc, or 19 percent of the pathway. That is materially higher than the pre-vacatur running rate, which had held near 8 to 10 percent through Q1 and early Q2 2026 under the Notice 2025-42 restrictions.
The related-party filings are legal under the post-vacatur framework, which returned the interpretive baseline to Notice 2018-59. The paper trail is denser because a portion of the cohort was restructured from arms-length terms in Q2 to related-party terms in late June and early July, which produces a three-layer documentation stack: original arms-length EPA, post-vacatur restructuring memo, and final related-party EPA. A 2030 IRS examiner working through the stack will need to establish that the related-party pricing is arms-length equivalent, that the deposit was genuinely economically incurred by the developer rather than recycled through the related-party parent, and that the facility-cost denominator used in the 5-percent calculation reflects the same engineering-cost estimate under both the arms-length and related-party structures.
None of the three conditions is prohibitively difficult to document, but each condition adds an audit-hours multiplier that the tax-equity pricing on the related-party cohort has not yet reflected.
What tax-equity did in the first three business days
Tax-equity yields on the safe-harbored solar pool were roughly flat across the Monday and Tuesday sessions after the deadline. The physical-work pathway held its pre-deadline pricing. The cost-incurred pathway held the 35 to 55 basis-point widening that had opened after the June 6 vacatur, without further widening on the specific-cohort documentation gradient. The gradient trade, which would express as tighter pricing on early-June paid-at-execution EPAs versus wider pricing on late-week payment-deferred related-party EPAs, remains absent from the visible primary market.
The tax-credit insurance market showed the first cohort-specific pricing move on Monday afternoon. Two specialty carriers issued indicative quotes on late-week EPA cohorts that were 45 to 70 basis points wider than the average pathway pricing, with specific carve-outs on related-party restructurings executed after June 20. The insurance-market signal is now clearer than the tax-equity signal. Whether the insurance signal transmits into the tax-equity primary market on the Q3 2026 origination cycle is the open question through August.
Three watchpoints through Q3 2026
The Q3 2026 origination pace on post-July-4 OBBBA solar at the phased-down credit value. Q3 is the first full quarter under the reduced credit stack. A resilient Q3 pace argues that tax-equity is comfortable with residual audit-risk at the lower credit value. A drop-off argues that the intra-cohort gradient is starting to price in on the primary side.
Any Treasury guidance on the post-vacatur cost-incurred pathway. The most audit-defining guidance would clarify related-party EPA pricing standards, deposit-ratio thresholds under the Notice 2018-59 framework, and 3.5-month payment mechanics after vacatur. Guidance issued before year-end compresses the interpretive-risk floor on the 73 GWdc cost-incurred pool. Silence widens it.
The first supplier-side or developer-side stress event inside the 285-day payment-deferred window. The 32 GWdc payment-deferred cohort is now the specific portfolio where a Q3 or Q4 2026 supplier bankruptcy, developer refinancing failure, or portfolio-level tax-equity restructuring would translate directly into audit-documentation stress. The window is dated. The first event inside it will set the pattern for how the cohort resolves through April 15, 2027.
The shape of the four-year clock
The July 4 headline event has closed. The four-year continuity-of-construction clock is now running, ending July 4, 2030. The physical-work pathway will spend the first year of that clock on straightforward documentation packaging. The paid-at-execution cost-incurred pathway will spend it on standard project-development milestones. The 32 GWdc payment-deferred cohort will spend the first 285 days of it on a specific counterparty-risk window, with a hard payment date of April 15, 2027. The 14 GWdc related-party cohort will carry a denser documentation stack through the full four years.
Tax-equity has priced the pathway. It has not yet priced the intra-pathway gradient. The insurance market has started to. The primary tax-equity market’s response through Q3 2026 will be the first empirical read on whether the gradient prices in during origination, or whether it waits for the 2029 audit cycle.