Clean energy and clean manufacturing tax credits under the Inflation Reduction Act (IRA) are under threat in the US after the US House of Representatives passed the budget reconciliation bill, a key component of President Donald Trump’s fiscal package, known as the One Big Beautiful Bill.
The legislation, with some amendments from the originally proposed version, cleared the House narrowly with 215 yeas and 214 nays. Going by the amendments, the entire residential solar ecosystem would be ‘gutted’ according to analysts at ROTH.
According to the amendments introduced, installers that lease energy equipment to customers and collect investment tax credit (ITC) under Section 48E will be prohibited from doing so. Tax credits under 45Y and 48E will be available to projects that begin construction within 60 days after the enactment of the law and placed in service by December 31, 2028.
Additionally, the amendments propose an immediate end to residential ITC under 25D. These will not be available after December 31, 2025.
Philip Shen, Managing Director and Sr. Research Analyst at ROTH, believes ending 25D could ‘effectively shut down’ the residential solar industry from January 1, 2026.
Princeton University’s Andlinger Center for Energy & Environment lists the expected impact of the bill, saying that the potential impact of the bill passed by the House is substantively similar to the full repeal scenario. In case of the full repeal of the current federal energy and climate policies would imperil $522 billion in announced but pending investments in the US clean energy supply and manufacturing.
A positive element is that the amended bill leaves 45X credits and phaseout unchanged from the previous version (see US Legislation Proposes Earlier Phase Out Of Clean Energy Tax Credits).
The Solar Energy Industries Association (SEIA) has already warned that the bill could jeopardize nearly 300 solar and storage factories and erase $220 billion in local investments by 2030. Energy Innovation Policy & Technology estimates a decline in new power generation capacity, including a 33 GW decrease in solar additions (see SEIA: 300 Solar & Storage Factories At Risk With US Legislation).
SEIA President and CEO Abigail Ross Hopper calls it an ‘unworkable’ legislation that will ensure that America effectively surrenders the AI race to China and prepare for blackouts.
“But that’s not all: Americans’ electric bills will soar. Hundreds of factories will close. Hundreds of billions of dollars in local investments will vanish. Hundreds of thousands of people will lose their jobs. Families will lose the freedom to control their energy costs. And our electric grid will be destabilized,” added Hopper.
Another association of labor unions and environmental organizations, the BlueGreen Alliance, criticized the amended version of the budget reconciliation bill, saying that the provisions would kill job-creating investments made under the IRA, as there will likely be cancellations of planned clean energy manufacturing facilities.
“We urge all Americans to call their Senators and remind them who they work for. We will not stand by as they kill family-sustaining, union jobs, increase energy prices, and surrender our manufacturing future to China while trashing our clean air and water,” stated BlueGreen Alliance Executive Director Jason Walsh.
Having cleared the House, the legislation now heads to the Republican Party-dominated Senate before being signed into law by the US President. Many fear that, if cleared by the Senate in its present form, it will potentially reshape the country’s renewable energy landscape.
