The Senate dropped a proposed excise tax on solar and wind energy projects that don't meet strict standards after last-minute negotiations with key Republican senators seeking better terms for renewables.
Many Republican states host large renewable energy industries. The Senate also changed language about which solar and wind projects can use the 2022 Inflation Reduction Act's tax credits. In the Senate's final version, projects will be able to use the lucrative credits if they begin construction before 2026. A previous version was based on when the projects enter service.
That could mean higher consumer bills and lost jobs around the country at project sites dependent on the credits.
The Trump administration has brushed off criticism of the bill's aggressive phase out of renewable energy tax credit and its impact on grid stability and power prices, saying that ending these subsidies will pave the way for preferred baseload energy like gas and nuclear.
President Donald Trump said the package that would slash taxes, reduce social safety net programs and boost military and immigration enforcement spending priorities.
Another research firm, Energy Innovation, projected that the bill would result in a fall of 300 GW of electricity capacity at a time of soaring demand due to data center and AI growth.
The Senate bill effectively phases out renewable energy tax credits after 2026 if projects haven't started construction. Otherwise, wind and solar projects whose construction starts after that must be placed in service by the end of 2027.
“This bill will strand thousands of energy projects under development, jeopardize billions of dollars in private investment, and kill hundreds of thousands of good-paying American jobs — from electricians to contractors to local landowners and farmers who rely on these projects for stability,“ said Jeff Cramer, president of the Coalition for Community Solar Access.
Opponents said that could lead to hundreds of millions of dollars in subsidies for an industry that has suffered in recent years.
But she urged House lawmakers to try to make the wind and solar tax credits more useable.
“As this bill moves back to the House, we encourage members to maintain their support for these critical tax provisions, which bolster domestic energy generation to secure true American energy dominance,“ she said.
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