A newly revealed provision in the U.S. Senate’s domestic policy bill, supported by President Donald Trump, could severely undermine the nation’s renewable energy progress by eliminating federal subsidies and imposing a new excise tax on future wind and solar projects.
In an article publushed by The New York Times, industry leaders and energy policy analysts say the proposal would not only phase out existing tax incentives by 2027, but would penalize developers who fail to meet complex supply chain requirements — particularly those related to sourcing components outside of China and other “prohibited foreign entities.” The Rhodium Group estimates that the end of subsidies alone could cause wind and solar installations to drop by up to 72% over the next decade. The new tax could drive that figure even higher.
“This is how you kill an industry,” said Bob Keefe, Executive Director of E2, a nonpartisan clean energy advocacy group. Echoing that concern, Jason Grumet, CEO of the American Clean Power Association, warned that the provision is “so carelessly written and haphazardly drafted” that it could freeze markets and stall investment.
Since the passage of the Inflation Reduction Act (IRA) in 2022, clean energy developers have announced over $843 billion in planned investments across the United States, with nearly three-quarters located in Republican-held districts. Utilities, manufacturers, and data center operators have leaned heavily on wind, solar, and battery projects to meet soaring electricity demand and modernize aging grid infrastructure.
But under the proposed legislation, only projects completed by the end of 2027 would qualify for the existing 30% federal tax credit — a timeline industry experts say is unrealistic due to permitting delays and supply chain constraints. After that date, even unsubsidized projects could face excise taxes of 10–20% if developers are unable to prove their equipment avoids restricted sourcing channels.
The bill also repeals tax incentives for consumers installing rooftop solar, electric vehicles, and heat pumps, and limits support for new clean energy manufacturing facilities — including those producing transformers, batteries, and wind turbine components.
Critics within and outside the renewable energy space are urging revisions. Even Alex Epstein, a vocal critic of clean energy subsidies, opposed the excise tax, calling it a misguided overreach. The U.S. Chamber of Commerce added that “taxing energy production is never good policy,” regardless of the source.
Meanwhile, the bill includes expanded tax breaks for nuclear, hydroelectric, and carbon capture technologies, and adds new incentives for metallurgical coal — a move seen by many as politically symbolic, given President Trump’s repeated pledges to revive coal.
Sandhya Ganapathy, CEO of EDP Renewables North America, warned, “This puts into complete disarray billions of dollars in investments we’ve all planned.” The uncertainty created by the proposal could directly affect grid modernization, energy affordability, and the momentum of the clean energy transition.
As the bill moves forward in the Senate, utilities, developers, and grid planners are closely watching how its provisions could impact future project financing, grid reliability, and energy system resilience.
Source: New York Times
