"Slightly" Less Energy Scarcity
Here's a brief rundown of what's in — and out — of the Senate version of the budget bill, as well as links to the best summary articles I've seen so far
This post is free but paid subscribers get access to the full archives and Texas Grid Roundups, select episodes of the Energy Capital Podcast including the one released last week with Fluence VP of Policy Suzanne Leta on how energy storage is reshaping the Texas grid, special presentations, Reading and Podcast Picks, and more.
After a marathon session, the Senate passed the budget bill 51-50 with Vice President Vance breaking the tie. Now it heads back to the House, where there’s a lot of uncertainty about whether they House will approve it or send it back for more changes.
In a twist, Senator Murkowski — who was the 50th vote and could’ve blocked the bill—urged the House not to pass it in its current form. We’ll see if they listen.
Murkowski noted, correctly, that the Senate version includes a “slightly longer phase-out” of solar and wind tax credits.
But the change is minimal: just a six-month grace period to qualify for full credits without triggering the Foreign Entity of Concern (FEOC) restrictions.
It will still lead to energy scarcity, higher prices, and hurt America’s competitiveness with China.
As Heatmap’s Emily Pontecorvo reported on the Senate-passed bill:
Projects that start construction in 2025 avoid FEOC rules and qualify for 100% of the credit if completed by the end of 2030.
Projects completed within one year of enactment also get 100%, but must show that at least 40% of parts and components are free from FEOC-linked entities.
After that:
60% of the credit for projects starting construction after one year from enactment but still in 2026 and placed in service by the end of 2027
20% in 2027, placed in service by the end of 2027.
Rules defining FEOC entities still need to be written, creating more uncertainty and possible delays.
Much has been made of the Senate dropping the proposed excise tax on wind and solar. But it was likely a red herring—few supported it, and Senate Budget Chair Lindsey Graham didn’t even know where it came from.
FEOC restrictions apply to all clean energy credits: wind, solar, geothermal, nuclear, batteries, carbon capture, and hydrogen. All of those except wind and solar retain access to full credits through 2033.
What’s getting little attention:
Energy efficiency and residential solar tax credits will expire at the end of this year, though solar leasing, made popular with companies like SunRun, got a reprieve.
EV tax credits end September 30. If you’re thinking about buying an EV, do it soon.
This will almost certainly hurt EV sales — and may lead to the closure of EV and battery plants, which have a high concentration in the South. The IRA tied tax credits to U.S.-made batteries and components. Without that incentive, there's little reason to build EVs in America. A major step backward.
Further Reading:
The Senate’s Harsh Compromise on Clean Energy Tax Credits, Explained, Heatmap
“While more projects will likely be built under this version than the previous one, the basic outcomes haven’t changed: higher energy costs, project delays, lost jobs, and ceding leadership in artificial intelligence and manufacturing to China.”
“The advanced energy industry will endure, but the downstream effects of these rollbacks and punitive policies will be felt by American families and businesses for years to come,” Heather O’Neill, the CEO and president of the trade group Advanced Energy United, said in a statement Tuesday.”
Yep. You shoot at the renewable energy industry, you’re going to hit consumers.
There’s a Race to Power the Future. China Is Pulling Away, New York Times
"Entire industries are at stake, along with the economic and geopolitical alliances that shape the modern world."
This is exactly what Project 2025 proposed - by Emily Atkin
“What’s rational is not a reliable predictor of the future. We’d all be wise to remember it moving forward.”
Senate’s 'Big, Beautiful Bill' would be a disaster for clean energy, Canary Media
Senate passes megabill that curbs IRA tax credits, drops wind and solar tax | Utility Dive
Senate passes megabill after wind, solar changes - E&E News by POLITICO
A megabill mystery: Republicans ax solar and wind tax that surprised senators
Thanks for reading! Please share this post and newsletter.