“The only thing that this could do is increase electricity prices,” Ben King, director at Rhodium Group, told Canary Media on Monday. “You’re making everything that you want to build more expensive.”
Already, the legislation is undermining confidence among investors in energy infrastructure writ large, according to a Sunday research note from TD Cowen analysts John Miller and Cooper Pryde. They called the Senate bill a “full policy attack on renewables,” highlighting the singling out of solar and wind for punitive tax measures.
The tax policy drew a rare rebuke from Neil Bradley, chief policy officer of the Republican-friendly U.S. Chamber of Commerce, who wrote in a Saturday X post that “taxing energy production is never good policy, whether oil & gas or, in this case, renewables.”
The Senate bill also makes things worse for wind and solar by requiring projects to be “placed into service,” or actively providing electricity to the grid, by the end of 2027 to receive expiring tax credits. That’s a change from the existing “commence construction” deadline that simply requires a project to have begun construction to earn the tax credits, and could put tens of billions of dollars of projects now underway into financial turmoil.
Harry Godfrey, head of federal affairs for trade organization Advanced Energy United, said that the placed-in-service requirements constitute a “retroactive change to the law that strands investments, kills jobs, and undermines American energy abundance.” The excise tax, meanwhile, represents “a new tax on energy production, coming at a time of rising prices.”
Sens. Joni Ernst (R-Iowa), Chuck Grassley (R-Iowa), and Lisa Murkowski (R-Alaska) introduced an amendment on Monday seeking to remove those two provisions from the Senate bill.
Backers of the legislation have claimed that clean energy is inexpensive enough to compete with fossil fuels without federal incentives. “Ending these federal giveaways will lead to a more market-driven allocation of capital, favoring energy sources that are more economically efficient and better suited to meeting growing demand,” Thomas Pyle, president of the Institute for Energy Research, a right-wing think tank, told The Washington Post in a Sunday email.
The push to increase reliance on fossil fuels to power the country’s grid faces a serious hurdle — U.S. demand for electricity is growing far more quickly than fossil-fueled power plants can be built to serve it. Manufacturers of the turbines used in gas power plants are now backlogged through the early 2030s with existing orders, leaving no headroom to expand production to build new power plants to add to the country’s resource mix.
King noted that “85% of capacity in the pipeline right now is wind, solar, and batteries — and 86% of the capacity installed over the past three years is wind, solar, and batteries. You’re taking the thing that can actually get built over the next few years, as you’re facing this generationally large surge in electricity demand, and making it more expensive.”
In Texas, one such region and the country’s leading market for new solar and battery deployments, the Electric Reliability Council of Texas, which operates the state’s grid, has forecast a need for 65 gigawatts of new generation and storage capacity by 2031, said Doug Lewin, president of the energy consultancy Stoic Energy and author of the Texas Energy and Power newsletter. The Texas grid has relied on new solar and batteries to reduce its grid stresses during summer heat waves and drive down power prices.
“Where will the power come from? Where is this fairy-tale place that makes 65 gigawatts of gas turbines for Texas?” he told Canary Media on Monday. “Their answer is, we’ll get it eventually, but we have to stop the solar and wind and storage to get the gas.”
But throttling those clean-energy resources in hopes that new gas-fired power plants can replace them would be “very painful, and expensive, and downright impossible, if you want AI in this country,” Lewin said. “You could do it, but you’d have soaring utility costs for consumers, and AI competing with consumers for electricity.”
