(Reuters) -The U.S. Treasury Department on Friday unveiled stricter rules for how solar and wind projects can qualify for federal tax subsidies that President Donald Trump's new tax and spending law is phasing out over the next two years.

Under the new rules, utility-scale projects will be required to show substantial and continuous physical work to be eligible for the 30% tax credits, but they will still have four years to claim them.

For the last decade, project developers had also been able to "safe harbor" projects for four years by incurring 5% of total costs before a credit expired or stepped down to a lesser value.

According to an agency document, "substantial" work does not include permitting, design or holding components in inventory.

A solar industry trade group said the rules would harm businesses and undermine lawmakers' intentions with the One Big Beautiful Bill Act.

"This is yet another act of energy subtraction from the Trump administration that will further delay the buildout of affordable, reliable power," Solar Energy Industries Association CEO Abigail Ross Hopper said in a statement. "American families and businesses will pay more for electricity as a result of this action, and China will continue to outpace us in the race for electricity to power AI."