The proposed legislation, often referred to as the “Big, Beautiful Bill,” is set to bring about significant changes to the United States clean energy market. While recent Senate proceedings have removed some of the more detrimental provisions that could have adversely affected the industry, the current form of the bill still poses serious challenges. In essence, the legislation appears to undermine the domestic solar manufacturing industry and simplifies the progress made under President Joe Biden's landmark 2022 Inflation Reduction Act.
The bill proposes to eliminate vital incentives for both domestic and utility-scale solar power, as well as the Clean Electricity Production Credit. One of the most concerning aspects is the removal of the Domestic Content bonus, which previously encouraged the use of U.S.-made solar equipment. Additionally, several provisions aimed at promoting renewable energy did not survive the Senate's scrutiny, including a proposed excise tax on projects utilizing foreign materials. According to CBS News, this tax would have burdened renewable energy projects while favoring the longevity of coal and gas turbine plants.
Rob Gardner, Vice President of Congressional and Regulatory Affairs for the Solar Energy Manufacturers for America (SEMA) coalition, provided insights into the bill and its implications for the U.S. solar industry. He noted, “A positive is that it maintains production tax credits for manufacturers of clean energy components.” However, an important modification in the bill relates to the timeline for withdrawing existing tax credits. As it stands, projects that have already been approved will still qualify for current incentives, as will any projects that commence construction before June 2026.
Gardner elaborated, saying, “Basically, a year after enactment, companies have to begin construction on utility-scale solar projects to receive the full amount of the credit.” Furthermore, according to § 70512 (4)(a), these plants must be “placed in service” by December 31, 2027. Despite these provisions, Gardner expressed concerns about the long-term implications of the bill, stating it creates “uncertainty for long-term demand for U.S. products.” With American-made solar panels typically being more costly than their Chinese counterparts, the reduction of incentives may lead to an influx of cheaper Chinese solar products in the U.S. market.
As projected by the U.S. Environmental Information Administration, total domestic energy consumption is expected to increase by nearly two percent in the coming year. A slowdown in the addition of new energy sources could hinder progress at a crucial time when renewables accounted for about 90 percent of new power generation capacity in 2024. Despite the challenges posed by the bill, solar energy is likely to remain the primary technology driving new power generation capacity.
Abigail Ross Hopper, CEO of the Solar Energy Industries Association, did not hold back in her critique of the bill, stating that it “undermines the very foundation of America’s manufacturing comeback.” She warned that families could face increased electricity costs, factories may close, and jobs could be lost, ultimately weakening the U.S. electric grid. Similarly, Jason Grumet, CEO of the American Clean Power Association, described the bill as a “step backward” for U.S. energy policy, characterizing it as an “intentional effort” to diminish one of the fastest-growing sources of electric power.
The potential passage of this bill has raised alarms among environmental advocates. John Noël, Deputy Climate Program Director for Greenpeace USA, condemned the legislation, asserting that “this is a vote that will live in infamy” for its implications in providing support to the fossil fuel industry. Joanna Slaney, Vice President for Political and Government Affairs at the Environmental Defense Fund, echoed these sentiments, emphasizing that the bill effectively curtails the supply of affordable energy at a time when the U.S. needs it most.
Conversely, the bill also offers a controversial “10-year reprieve from paying a fee on wasteful methane pollution,” a greenhouse gas with a far greater environmental impact than carbon dioxide. This aspect of the legislation has further fueled criticism as it appears to contradict efforts aimed at reducing harmful emissions and combating climate change.
