The U.S. clean energy sector may be headed for a sharp slowdown.
A sweeping tax overhaul backed by former President Donald Trump—called the “big, beautiful bill”—is rattling the solar industry and threatening to undo the progress jumpstarted by President Biden’s Inflation Reduction Act (IRA).
The bill, recently passed by House Republicans, would repeal key tax incentives that have driven massive investment in solar and battery storage, especially in Republican-led districts.
Analysts at investment bank Jefferies described the proposal as a “worse than feared scenario,” saying it could dismantle the economic boom triggered by the IRA.
If enacted, it would unwind momentum that has led to more than $161 billion in announced solar and battery projects since 2022.
Solar on the Brink
The legislation would eliminate the investment and production tax credits for clean energy facilities that begin construction 60 days after the bill is enacted or enter service after 2028.
These credits have enabled solar to become the fastest-growing power source in the U.S., with solar and battery storage expected to make up over 80% of new electricity generation capacity added to the grid in 2025.
Mary Powell, CEO of Sunrun, told CNBC the bill could result in the loss of 250,000 jobs and higher electricity prices.
Shares of Sunrun, a major rooftop solar provider, plunged 37% Thursday—the company’s worst performance to date.
Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, criticized the bill as ignoring how solar and battery systems help meet growing electricity demand from U.S. consumers and businesses.
She warned the proposal would “upend an economic boom in this country that has delivered an historic American manufacturing renaissance.”
“If this bill becomes law, America will effectively surrender the AI race to China and communities nationwide will face blackouts,” Hopper said.
Red States, Blue Investment
Ironically, Republican districts could bear the brunt of the fallout. Data from environmental group E2 shows that 81% of IRA-related clean energy investment has gone to GOP-held areas.
These districts could see stalled projects, factory closures, and job losses if the bill’s current language remains unchanged.
“The bill serves, in our estimation, as a de facto repeal of the credit as early as next year,” said Robbie King of the Rhodium Group. The group estimates a 57% to 72% drop in clean energy deployment over the next decade if the bill passes as is.
Guggenheim analyst Joseph Osha said the bill is “disastrous” for rooftop solar providers, especially companies like Sunrun that lease solar systems to customers.
According to Osha, roughly 70% of the residential solar market relies on leasing models that would no longer qualify for tax credits.
Foreign Entity Clause Adds More Barriers
The proposal also blocks clean energy projects from receiving credits if they obtain “material assistance” from prohibited foreign entities. This provision primarily targets Chinese suppliers of key inputs like solar panel glass, cobalt, and lithium.
While the manufacturing tax credit remains intact until 2031, it too is subject to foreign entity restrictions, potentially limiting its usefulness to firms such as First Solar.
GOP Senators Signal Potential Changes
Some Republican senators appear wary of the bill’s far-reaching implications. Sen. Shelley Moore Capito (R-W.Va.) told Politico the bill appears to act as a blanket repeal of clean energy tax credits, but added, “I would expect that to change. There has been job creation around these tax credits.”
This pushback offers a glimmer of hope that the Senate could soften or revise the bill’s harshest provisions.
Short-Term Options Limited
The bill comes at a time of rising electricity demand, driven by artificial intelligence data centers, reindustrialization, and the broader electrification of the economy.
Right now, solar, battery storage, and wind power account for 92% of planned new power projects awaiting connection to the grid, according to Interconnection.fyi.
Natural gas demand is also rising, but delays in turbine production—often five to six years—make it an unviable short-term fix.
Reid Ramdathsingh, an analyst at Rystad Energy, noted that while growth in clean energy may slow, renewables will still need to be deployed.
“The demand is there for energy,” he said. “Gas is not able to meet this demand in the short term. The biggest alternative to that gas generation that we would need in the next couple of years is renewables.”
This moment underscores the intersection of energy policy and business strategy, where shifts in legislation can either fuel innovation or bring entire sectors to a standstill.
Whether the Senate reins in the bill—or lets America’s clean energy push stall—remains to be seen.
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