Heightened federal oversight due to a U.S. Department of Interior (DOI) memorandum calling for reviews of solar and wind energy projects could expose around 12 GW of projects on federal lands and 80 GW on private lands to permitting risks, casting uncertainty over $121 billion of investments, according to an analysis by Wood Mackenzie.

The report noted that permitting changes and federal funding withdrawals directly contributed to 7 GW of project cancellations or inactivity on federal lands in the U.S. in 2025.

The 2025 memorandum centralized federal review for several wind and solar projects by introducing a multi-step approval process. It extends permitting timelines and steps up scrutiny for any project involving a U.S. federal agency.

The solar industry had written to the Senate and House of Representatives, urging them to work with DOI to address the memorandum that had resulted in a near-complete moratorium on solar permitting.

The U.S. solar energy sector has the largest absolute exposure, with 30% of projects at risk. However, in terms of proportional exposure, 62% of the wind energy pipeline is at risk of heightened federal scrutiny.

After the implementation of the permitting rules, around 32% of early-stage wind and solar projects face centralized federal reviews.

Texas, California Face High Risk

Projects slated for 2029 constitute the largest volume of capacity on federal lands at risk of additional scrutiny, a move, which the report stated, could also hamper tax credit eligibility.

Exposure to additional review is highest in states like Texas, California, and Arizona. There are fears that such federal oversight could also push commercial operation dates of projects beyond scheduled timelines.

“Since 2025, dozens of gigawatts of early-stage capacity have been canceled or stalled across solar, wind and energy storage. However, it’s important to note that not all cancellations are due to permitting challenges. Some also stem from supply chain constraints and tighter financing conditions,” said Kaitlin Fung, senior research analyst at Wood Mackenzie.

The U.S. solar industry added 43.2 GW of new capacity in 2025, a 14% decline from 2024, a joint report published by Wood Mackenzie and Solar Energy Industries Association in March this year said. At 11,043 MW of installed capacity, Texas retained its position as the largest solar market in the U.S., followed by California (4,665 MW) and Indiana (2,996 MW).

Potential Relief

Despite the uncertainty over such federal reviews, analysts at Wood Mackenzie feel recent policy developments could offer some relief to affected developers.

The report cited a preliminary injunction issued in April 2026 by a U.S. federal court that blocked agency actions imposing new restrictions on wind and solar projects. The court ruled that the restrictions were unlawful under the Administrative Procedure Act. The injunction might not do much to tackle broader permitting bottlenecks, but it does reduce further disruption while calling for a more coordinated approach towards federal permitting processes.

Currently awaiting Senate approval, the Simplifying Permitting and Ending Endless Delays (SPEED) Act is another policy move that could significantly shorten permitting timelines for infrastructure and clean energy projects. If implemented, the proposed law can narrow the scope of environmental scrutiny, enforce stricter timelines for permitting decisions, and limit duplication across agencies.