Big Beautiful Bill Threatens Solar Industry Gains by Slashing Clean Energy Incentives

The "One Big Beautiful Bill," recently passed by the U.S. House of Representatives and backed by former President Donald Trump, proposes significant rollbacks to clean energy incentives established under the Inflation Reduction Act (IRA). If enacted in its current form, this legislation could have profound impact on the solar industry.

Potential Impacts on the Solar Industry

1. Reduction of Tax Credits and Incentives

The bill aims to accelerate the expiration of key tax credits, including the Investment Tax Credit (ITC) and Production Tax Credit (PTC), which have been instrumental in promoting solar energy projects. The proposed changes include:

• Eliminating or curtailing tax credits for solar energy projects by the end of 2025.

• Imposing strict eligibility requirements, such as requiring projects to begin construction within 60 days of the bill's enactment and be operational by 2028.

These changes could significantly hinder the growth of solar energy by reducing financial incentives for new projects.

2. Impact on Domestic Manufacturing and Jobs

The IRA had spurred a surge in domestic solar manufacturing, with over $100 billion in private sector investments and the announcement or expansion of 51 solar manufacturing facilities. The proposed bill threatens to reverse these gains by:

• Blocking the 45X manufacturing tax credits for foreign entities of concern, particularly Chinese-owned companies or those affiliated with them.

• Causing manufacturers to pause expansion plans due to growing uncertainty, leading to the cancellation or downsizing of around $8 billion in projects in early 2025.

This could result in job losses and a slowdown in the growth of the domestic solar manufacturing sector.

3. Market Uncertainty and Investment Risks

The proposed legislative changes have already led to market volatility, with renewable energy stocks experiencing significant declines. For instance, SunRun shares dropped over 38%, Enphase Energy declined 19%, and First Solar decreased around 4% following the bill's passage in the House. This market uncertainty could deter future investments in the solar sector.

4. Potential Increase in Energy Costs and Emissions

Analyses suggest that repealing the IRA's incentives could lead to:

• A reduction in clean energy's share of electricity generation to just 54% by 2035, compared to over 70% under existing incentives.

• A smaller decline in coal use (14% vs. 85%) and a surge in natural gas demand (nearly 30%).

• An increase in household energy expenses by more than $400 annually.

These changes could undermine efforts to reduce greenhouse gas emissions and combat climate change.

Political Outlook

The bill now moves to the Senate, where its future is uncertain. Several Senate Republicans, particularly those from states that have benefited from clean energy investments, have expressed concerns about the bill's potential impacts. They may seek to moderate or amend the proposed rollbacks.

Conclusion

If enacted in its current form, the "One Big Beautiful Bill" could significantly hinder the growth and development of the U.S. solar industry by reducing financial incentives, causing market uncertainty, and potentially increasing energy costs and emissions. The Senate's response to the bill will be crucial in determining the future trajectory of solar energy in the United States.

How to take action

Industry analysts have identified four members of the Ways and Means Committee who could be influential in determining the fate of the solar tax credit:

• Nicole Malliotakis (R-NY-11) | (718) 568-2870 | Contact form

• Blake Moore (R-UT-1) | (801) 625-0107 | Contact form

• Brian Fitzpatrick (R-PA-1) | (215) 579-8102 | Contact form

• Vern Buchanan (R-FL-16) | (941) 951-6643 | Contact form

If you're concerned about these potential changes, consider taking these actions:

• Contact your representative: Especially if you live in one of the districts above, call your representative's office directly to express your concerns. You can also fill out this form to be connected with your members of Congress, regardless of where you live.

• Highlight local impact: Mention specific impacts on jobs and businesses in their districts.

• Request a longer transition: While the 2025 deadline provides some runway, advocate for maintaining the original timeline or at least extending it through 2026 to allow for better industry planning and adaptation.

If you're considering going solar, the potential 2025 deadline means the clock is now ticking. Speaking with installers sooner rather than later can help ensure your project is completed in time to qualify for the 30% tax credit. 

According to our sources, we still have a shot in the Senate, indicating that even if the House votes to approve this accelerated timeline, there may be opportunities to preserve a more reasonable phase-down in the final legislation.