Wind and solar energy are experiencing the “darkest hour”! Senate tax bill wants to end “scenery” subsidies early

The Zhitong Finance App learned that US Senate Republicans announced a major tax bill that plans to end tax credit government subsidies for the wind and solar energy industries belonging to clean energy earlier than other types of energy. At the same time, only moderately limited changes were made to most other incentives and government subsidy measures, disappointing the hopes of all parties seeking to mitigate the impact of major cuts passed by the House of Representatives.

According to information, the Senate version of the bill plans to end incentives for wind and solar energy in 2028, while tax breaks for other energy sources will be kept until 2036. The Senate bill will also completely eliminate US tax credits for companies that rent rooftop solar systems and homeowners who buy solar systems directly. Analysts say this move will severely damage the faltering US solar industry and the clean energy industry as a whole.

After the publication of the Senate Republican bill, the solar sector became the group with the worst performance in pre-market trading of US stocks. Some companies may even declare bankruptcy within the year, or will be the sector with the highest number of bankruptcies declared in a year in the US stock sector. The stock price of Sunrun Inc (RUN.US) once plummeted by more than 28% before the US stock market, SolarEdge Technologies Inc. (SEDG.US) once fell more than 22% before the market, and Enphase Energy Inc (ENPH.US) once fell 17% before the market.

“It looks like the Senate Finance Committee only raised this bill from a pure negative D to a solid D+ for the clean energy industry across the US,” Ethan Zindler, a senior analyst at BloombergNEF and a former US Treasury official, said in an interview. “And it may also be mixed with a slight performance expansion factor.”

What Ethan Zindler meant was that the Senate Republicans' new text was indeed slightly “improved” from the previous version (House version or earlier draft) — for example, by removing harsh provisions requiring projects to start within 60 days to receive a credit — but overall it still remains extremely unfriendly to clean energy such as wind power and solar energy, only rising slightly from “poor” to “slightly poor.” In the British and American school scoring system, A to F represents grades from good to bad; D is close to failure; D+ is only slightly better.

Although the new version of the bill no longer requires projects to start within 60 days to receive a credit, it will completely end incentives for wind and solar energy in 2028. According to the legislative summary, tax deductions for other sources of electricity such as nuclear, hydropower, and geothermal will be retained and will be allowed to be phased out until 2036.

The legislation is part of US President Donald Trump's trillion-dollar landmark economic plan and will cut credits under the Inflation Reduction Act. The $7,500 electric vehicle credit, which is popular with American consumers, will be completely abolished 180 days after the bill goes into effect, while the House version of the bill is reserved for most electric vehicle models until the end of the year.

Despite lobbying by many companies, including Plug Power Inc., the American Petroleum Institute, and the Fuel Cell and Hydrogen Energy Association, the Senate version plans to remove up to $3/kg of clean hydrogen production incentives.

The Senate version of the bill would also completely end the tax credits enjoyed by clean energy companies such as Sunrun that rent rooftop solar systems and homeowners who buy solar systems directly. Analysts said that the cancellation of the credit will severely damage the US solar industry, which is already in trouble. Recent uncertain expectations of clean energy tax credits have led to severe market turmoil, and it is expected that the clean energy market will continue to be volatile for some time to come. Extreme negative examples brought about by recent turmoil include contributing to the bankruptcy of Solar Mosaic Inc., a major residential solar lender.

The Senate bill preserves tax credits for nuclear power, which has both clean and efficient attributes. Nuclear power is also a major energy project that the Trump administration has supported for a long time. The House version required the project to start before the end of 2028 to enjoy the credit. Analysts believe this period is simply not feasible in the Senate version.

The US government's attitude towards nuclear reactors can be described as a complete shift. In particular, after Trump returned to the White House, he vigorously promoted the revival of US nuclear power, but the Trump administration continued to suppress a wide range of clean energy fields such as wind energy, solar energy, and electric vehicles, and refused to grant any further federal subsidies. On May 23, US President Trump signed four presidential executive orders to promote the reform of the US nuclear energy industry, including expanding the scale of US nuclear energy, the nuclear energy industry chain, and shortening the approval cycle for nuclear power projects; this move may sound the trumpet for the revival of US nuclear power. It was positively influenced by Trump's signing of a number of so-called “nuclear power revival orders,” which is why OKLO in the US stock market and stocks related to nuclear energy and nuclear power around the world continue to rise sharply.

Unlike the House version, Senate legislation does not currently limit the project party's ability to sell tax credits to third parties, and this may make the credits easier to use in the market.

The Senate's heavy bill can be described as triggering extreme dissatisfaction among environmental and clean energy organizations. The Clean Electricity Association of America said the bill “will push up electricity bills for American households and threaten hundreds of thousands of jobs across the US.”

“Without a reasonable timeline for companies to adapt to tax increases, high-paying jobs, technological innovation, and AI data centers will all be forced to move overseas,” Jason Grumet, CEO of the association, said in a statement.

However, the Senate version of the bill may still make major adjustments due to Democratic opinions; Senate Republicans plan to pass it by July 4 and quickly return it to the House of Representatives for final approval.