794 planned clean electricity generation facilities could be lost.......

‘Throwing us off a cliff’: Megabill could derail hundreds of planned clean energy projects

A POLITICO analysis identified 794 planned clean electricity generation facilities — mostly in GOP districts — that could lose subsidies under the House bill. The Senate is debating changes.

By Kelsey Tamborrino and Jessie Blaeser

House and Senate Republicans are divided over how hard a blow their megabill should strike against the clean energy tax credits at the heart of Joe Biden’s climate law.

Hundreds of projects — overwhelmingly in Republican districts — hang in the balance.

An analysis by POLITICO identified 794 wind farms, solar plants, battery storage facilities and other clean electricity generation projects that have not yet begun construction and could be at risk of losing two crucial tax breaks if the House prevails in rolling back Democrats’ 2022 climate law. A competing proposal from the Senate Finance Committee would make a less aggressive attack on the law’s incentives — but even then, hundreds of those projects could still lose all or part of the tax breaks if they don’t move fast enough to start construction.

The ultimate shape of the Republicans’ “big beautiful bill” stands to have a major impact on the wave of clean energy projects that Democrats’ Inflation Reduction Act helped launch across the country, with implications for jobs, climate change and the United States’ ability to meet the power demands of technologies such as artificial intelligence. Clean energy makes up the majority of new power capacity expected to be added to the nation’s electric grid during the next five years, according to a POLITICO analysis of data from the U.S. Energy Information Administration.

Advocates for solar power, hydrogen and other forms of clean energy are blitzing Capitol Hill in hopes of further relaxing the Senate language, which could allow more projects to take advantage of the Biden-era tax incentives than what House lawmakers offered.

But they are facing a fight from budget hawks worried about the tax credits’ impact on the deficit — as well as hardcore supporters of President Donald Trump’s campaign promise to dismantle Biden’s climate legacy.

The House’s version of the megabill, which the chamber passed last month, aims to fulfill Trump’s pledge by limiting or removing most of the IRA’s clean energy tax credits. Those include two tax breaks that are especially critical for the projects examined in POLITICO’s analysis, known as the clean electricity investment and production tax credits.

The House bill would require projects generating clean electricity to begin construction within 60 days of the bill’s enactment to benefit from the tax credits. That deadline would hit shortly after Labor Day if Republicans meet their goal of passing the bill by July 4.

It would also require that projects be placed into service by the end of 2028 to claim the two tax breaks.

The House language would functionally end the credits for many planned projects, clean energy advocates and companies argued.

“I have a few projects that may survive, but most of them in my pipeline need the [investment tax credit], and in 60 days, they can’t get up and running,” said Kay Aikin, founder of Dynamic Grid, a Maine-based energy systems company.

“It’s basically throwing us off a cliff,” she said.

POLITICO used data from the EIA and the policy research firm Atlas Public Policy to identify clean electricity generation projects — such as a solar power plant in southeast Georgia and a wind power facility in Iowa — that had not started construction as of April 30. The data tracks all existing and proposed electricity projects that would produce at least 1 megawatt of maximum power output, excluding residential solar installations.

POLITICO’s analysis shows that the facilities that the two tax credits are intended to support would have a maximum power-generating capacity of 156,700 megawatts, as determined by the manufacturer. While day-to-day electricity generation is often less than a plant’s maximum output, that capacity is enough to meet the needs of at least 27.5 million homes for one year, according to Atlas.

Electricity demand is only going up as more data centers come online and as additional manufacturing plants connect to the grid. Total electricity demand among many utilities is projected to increase by 22 percent from 2023 to 2035, according to an analysis by RMI, a clean energy think tank.

It’s unclear how many projects could survive without the support offered by the credits. Even so, “now is not the time to be taking new generation off the grid, and especially new cheap generation off the grid,” said Tom Taylor, senior policy analyst for Atlas, speaking of renewable energy.

Roughly three-quarters of clean electricity generation facilities not yet under construction would be in Republican districts, according to POLITICO’s analysis of Atlas data.

Should the House language become law as written, projects would have roughly two months to begin construction — a complex and potentially expensive requirement that they could meet by either starting physical work or paying a portion of a project’s total cost.

Aside from the construction requirements, some of the projects could be derailed by the House bill’s mandate that they also begin operating by the end of 2028. Even if all 794 projects can successfully start construction within 60 days of the law being passed, 50 of them do not now plan to begin operations until 2029 or later, according to POLITICO’s analysis of data from Atlas and the EIA.

“The impact is certainly much greater than what these numbers would show,” Taylor said, noting that uncertainty surrounding the tax credits and Trump’s tariffs might delay a project from announcing plans.

The House bill would offer leeway to one type of clean energy technology: Nuclear facilities would not have to begin construction until the end of 2028, rather than the 60-day deadline that solar, wind and battery projects would need to meet. But few current projects would seem immediately poised to benefit from that generous timeline. As of April 30, EIA’s data shows just a single nuclear project in the planning stage, and it has yet to receive regulatory approval, according to the agency.

The figures highlight the wide scope and potential impact of House Republicans’ plans, which went further than some earlier GOP proposals for sunsetting the credits.

“The 60-day threshold is essentially a repeal,” said Sean Gallagher, senior vice president of policy at the Solar Energy Industries Association. “It starts 60 days after the bill is signed, and it stops projects in their tracks.”

Gallagher said the House’s requirement that projects be “placed in service” by Dec. 31, 2028 — not just begin construction by then — is also “a real problem.”

“The date that a project is actually placed in service is in many ways outside of the control of the developer, because you’ve got things like interconnection delays or permitting delays,” he said.

Some GOP senators have acknowledged the challenge of the House-passed language.

“The start date is a big deal,” Utah Sen. John Curtis said at POLITICO’s Energy Summit last week.

“If I’m a bank and there’s a date here that says ‘if your project isn’t done by this date,’ the bank is not likely going to lend on that,” Curtis said, noting that supply chain problems, natural disasters and other factors could force delays.

The Senate Finance Committee’s portion of the Republicans’ budget reconciliation bill, released this week, would pare back some of House lawmakers’ deep cuts by eliminating the 60-day construction timeline and the December 2028 deadline for projects to be placed in service. It would retain the credits for certain sources, such as nuclear, geothermal, hydropower or energy storage.

But the Senate language would still single out wind and solar energy for harsher treatment. Wind and solar projects would need to begin construction by the end of this year to receive the full credit — and would have to start construction before 2028 to claim it at all.

Just under 80 percent of the 794 clean energy generation plants in the queue include wind and solar projects. Of these 626 projects, at least 57 reported an expected operational date by the end of the year, meaning they would be guaranteed to receive the full value of the credits, should they pursue them.

That leaves as many as 569 wind and solar initiatives facing questions about whether they would lose all or part of the tax credits under the Senate proposal.

“These changes are a minor improvement from the House bill, but are a major disappointment for the industry,” said Heather Cooper, a partner focused on tax issues for energy clients at the law firm McDermott Will and Emery.

Jason Grumet, head of the American Clean Power Association, a clean power trade group, added that the abruptness of the credits being revoked under the Senate text would strand U.S. investments.

“You’re basically encouraging a cliff, with people racing to get projects that are underway [or] sped up so that they don’t wind up on the wrong side of that cliff,” he said, adding that it would affect companies differently depending on their business strategies and financing.

House conservative hardliners who pushed for their chamber’s restrictions say they are designed to limit the reach of the subsidies, while meeting Trump’s promise to claw back what he calls the “Green New Scam.” Trump administration officials and some congressional Republicans also argue that the government should not support “intermittent” electricity such as wind and solar that they maintain hurts the grid.

Rep. Chip Roy (R-Texas), the policy chair of the conservative House Freedom Caucus, wrote on X early Monday that the “IRA needs to be terminated as President Trump said.”

The Freedom Caucus said earlier this month that its members would “not accept” any Senate attempts to water down or walk back the House’s clean energy rollbacks. On Monday, Roy said he would not vote in favor of the Senate language as written.

Other proponents of the House’s approach are urging GOP senators to terminate projects after 2028 by making the tax breaks hinge on whether the power source is placed in service by then.

“Green New Deal subsidies that don’t terminate by 2028 will effectively become permanent,” Senate Energy and Natural Resources Chair Mike Lee (R-Utah) wrote Wednesday on X, calling for Congress to set an end date.

Already, the prospect of either chamber’s text becoming law is weighing on project developers, some of whom are reevaluating and reconfiguring their plans to try to meet the proposed language — even if they remain hopeful that GOP senators will make the provisions more workable.

“Ultimately, developers are still going to be scrambling for the next six months to do whatever they can to put as many projects in the pipeline as possible before the end of the year,” said Cooper. The scramble would include calling every equipment supplier and reaching out to investors to look into cash sources, she said.

Under existing tax law, projects can meet certain tests to qualify as beginning construction, including by taking steps beyond directly putting shovels in the ground. Some of those tests benefit larger developers or are capital intensive.

The most common metric is a “safe harbor” in which a project developer spends 5 percent of the project’s total costs, while another test involves conducting either on- or off-site physical work on a project.

But each option comes with practical challenges that could further narrow the number of developers that can qualify for the credits, according to tax experts and clean energy advocates.

For Aikin of Dynamic Grid, the House-passed language is a troubling prospect for her business. “We will move projects forward, and then nothing will happen. It will be just a desert,” she told POLITICO.

Aikin said lawmakers should provide a “glide path” for the credits, or else the future is uncertain.

“The ITC has been around since 2005,” she said. “Republican, Democratic. It’s always been a bipartisan program, and now, all bets are off.”