The renewable energy industry faces a new series of hurdles after President Donald Trump signed the ‘One Big Beautiful Bill’ into law on July 4. The law quickly phases out tax incentives for wind and solar power, which some experts warn could lead to project cancellations, job losses and higher electricity prices as well as power shortages.
The changes are a significant shift in policy as the Trump administration looks to end taxpayer support for renewable energy. In the lead-up to the bill’s passage, U.S. Secretary of Energy Chris Wright called incentives for wind and solar “wasteful and counterproductive.”
“The more we load our grid with intermittent generation, the worse the grid performs during times of maximum stress and demand,” Wright wrote in an op-ed for the New York Post. Wright referenced a January winter storm in which the mid-Atlantic’s regional grid received only 4% of its power from renewables when electricity demand was high.
Opponents of the policy change, however, argue that it will slow renewable energy development at a time when the U.S. grid needs additional power generation to feed power-hungry data centers. In addition to causing project cancellations and job losses, renewable energy groups and industry analysts argue the new deadlines will limit new supply, forcing prices up and making the grid less reliable, especially during hot summers.
“This bill on the whole is negative for energy development in the United States, for manufacturing, and for just everyday families and consumers,” said Harry Godfrey, managing director focused on federal policy at the advocacy group Advanced Energy United.
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The ‘Big, Beautiful Bill’ pushes the deadline for wind and solar energy to qualify for tax credits from the end of 2032 to 2027.
How did the ‘One Big Beautiful Bill’ change renewable energy incentives?
The tax credits allow companies to earn a small reward — typically less than 1 cent per kilowatt-hour — for power generated by renewable energy sources. Once a new wind or solar installation begins providing electricity to the grid, the companies can claim the tax credits for the next 10 years.
Under the 2022 Inflation Reduction Act, companies that began construction by 2033 would qualify for 10 years of credits once they started operating. The new law shortens the deadline and adds a requirement for the project to begin providing power to the grid. Now, projects that begin construction within the next 12 months have until 2030 to begin operations. Any projects that start construction after July 4, 2026, or those already under construction, need to be operational by the end of 2027 to qualify for tax credits.
How will the deadlines affect renewable energy?
Godfrey said project development usually takes two to four years before construction of new wind or solar projects begin. In that time, projects can be held up by local or federal permitting processes and lawsuits.
As a result, Godfrey said there are projects “in active development right now that are not going to be able to commence construction here in the next year.” The new deadlines threaten to “cut those projects off at the knees,” he said.
Construction can take as little as six months for some solar projects or several years for large offshore wind, Godfrey said. Even once construction is finished, Godfrey added that projects must be connected to the grid before being deemed truly operational. That lengthy process, called interconnection, is controlled not by the renewable energy companies but by regional grid operators.
“The vast majority of these project developers are looking to outside capital in order to go about financing their projects,” Godfrey said. Without certainty that the projects will qualify for tax credits, he expects a significant number of financers will pull out of projects already underway.
Will the grid become less reliable?
Michael Keyser is the CEO of the National Renewables Cooperative Organization, where he helps local electric cooperatives around the country adopt renewable energy and other emerging technologies. In an interview with Straight Arrow News, Keyser said he is skeptical about dire predictions of cost increases and grid reliability issues.
While he acknowledged that some ongoing projects may not qualify for tax credits, he said that changing the long-term incentives away from wind and solar is a “shift that we needed.”
The Big Beautiful Bill keeps the window to qualify for tax credits open longer for clean energy sources like nuclear, hydropower, geothermal and batteries, which are not dependent on weather conditions. Keyser said electric co-ops are increasingly leaning toward these technologies — especially batteries — and other “dispatchable” resources that provide power to the grid whenever it’s needed.
“It’s time for [wind and solar] to stand on their own two feet,” Keyser said.
Doug Lewin, an energy expert and author of the Texas Energy and Power Newsletter, agreed that the grid needs clean dispatchable power, but he sees a danger in “hamstringing” renewables.
In an interview with Straight Arrow News, Lewin noted that dispatchable technologies, such as natural gas and nuclear, have even longer planning and construction timelines than wind and solar. In the immediate future, the grid needs more power, and solar is the fastest-growing energy source.
The new law, Lewin said, lacks “any sort of logical, sensible vision for how we’re going to grow power.”
Another source of uncertainty for renewable energy comes from the “foreign entities of concern” rule, a part of the law that places limits on the number of components companies can source from China, Russia, Iran and a few other nations. The exact guidelines have not yet been written, but on Monday, July 7, President Trump issued an executive order, giving the Treasury Department 45 days to finalize a rule.
Lewin said the policies amount to “choking out supply,” which he said could have dire consequences. “
“Higher prices and a whole lot more conservation alerts, energy emergencies, and the occasional rolling outage. That’s what we’re looking at over the next few years,” he said.
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Author: Keaton Peters
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