Republican lawmakers passed a settlement law on Thursday that rewinds many of the Inflation Reduction Act (IRA), among other things. The bill is awaiting President Donald Trump’s signature after two Republicans voted for NO. Trump is expected to sign it.
Solar, wind and clean hydrogen all lose incentives under the new bill, but nuclear and geothermal see the benefits of a conserved IRA. The final bill, which originated from the Senate Finance Committee in mid-June, offers a slightly longer timeline for claiming a clean energy tax credit than the committee’s draft.
Solar and wind developers will need to connect to the grid by the end of 2027 or break into new projects within 12 months of the passage of the bill to access the tax credit.
The data center sector could suffer the most under the new bill. For the past few years, solar, wind and batteries have been easy ways for hyperscalers and developers to quickly get cheaper power. For example, solar farms can usually be completed in 12-18 months, but the backlog of new natural gas turbines will grow in the early 2030s.
Climate technology startups are sure to feel the pain too. Green hydrogen startups may feel it the most keen. Tax credits worth up to $3 per hydrogen could expire at the end of 2027.
Geothermal, nuclear and battery storage survived tax incentives until the end of 2033. However, new rules related to “foreign entities of concern” can make tax credits even more difficult.
