New Senate GOP bill would kill clean power and spike energy costs

Senate Republicans have crafted a tax and spending bill that would create an unprecedentedly hostile landscape for the development of solar and wind power.

If passed in its current form, the Senate version of ​“One Big Beautiful Bill” released late Friday would crash the rollout of clean energy, which now accounts for over 90% of the new electricity-generation capacity being added to the U.S. power grid. It would also stymie the nascent U.S. solar, battery, and electric-vehicle manufacturing sectors, which experts say are vital to putting the country on competitive footing with China.

The bill would have a profoundly negative impact on the U.S. economy. It would spike energy costs for both households and companies, both of which are already dealing with rising utility bills nationwide. It would make it nearly impossible for utilities to keep up with fast-rising energy demand from AI data centers. It would destroy jobs.

“If enacted, this stands to be the biggest job-killing bill in the history of this country,” Sean McGarvey, president of the North America’s Building Trades Unions, wrote in a Saturday statement. The group estimated that the bill’s cuts to energy incentives could eliminate an estimated 1.75 million construction jobs, translating to $148 billion in lost annual wages and benefits.

The latest Senate version of the bill comes amid intense pressure from President Donald Trump to extend tax cuts he passed during his first term, which would disproportionately benefit the wealthy. In late May, the House passed its version of the bill, which was widely decried as disastrous for the clean-energy industry. The Senate proposed a version earlier in June that was less aggressive in its phaseout of clean-energy incentives, sparking hope that some Inflation Reduction Act provisions would be salvaged.

But on Friday night, Senate Republicans reversed course and introduced a version of the bill that would be worse — for clean energy, consumers, and the energy system as a whole — than even the initial House bill.

The House bill calls for abruptly ending clean-energy tax credits within the next few years, which would leave hundreds of billions of dollars of investments in factories and clean-energy projects in financial limbo. The Senate bill accelerates the elimination of these tax credits for clean energy, electric vehicles, and advanced manufacturing, Jesse Jenkins, head of Princeton University’s Zero Lab, wrote in a Saturday X post.

Worse still, the Senate draft adds an unprecedented excise tax on solar and wind projects that aren’t completed by 2027, based on their proportion of equipment made by companies with links to ​“foreign entities of concern,” including China, which produces most of the world’s solar and battery technologies and materials.

Think tank Energy Innovation released an analysis on Sunday that forecast the bill — in large part due to this excise tax — would prevent the construction of 300 gigawatts of generation capacity by 2035. That’s an enormous amount of forgone energy: The entire U.S. grid had an installed capacity of 1,200 GW in 2023. Energy Innovation estimates the Senate bill would cost the U.S. $960 billion in cumulative gross domestic product through 2034.

Less generation capacity also means higher energy costs. Energy Innovation forecast that the bill would drive up wholesale electricity prices 19% by 2030 and 61% by 2035. That means households would spend hundreds of dollars per year more on utility bills by 2035. The hardest-hit areas would be Republican-dominated states like Texas and Oklahoma, where fast-expanding solar and wind growth would be dramatically curtailed.

And, of course, the bill would derail any hope of the U.S. reining in its planet-warming carbon emissions. A May analysis from Princeton’s Zero Lab found that policies promoted by the Trump administration and Republicans in Congress would increase the U.S.’s annual carbon emissions by an additional 1 billion metric tons by 2035, compared to leaving in place the policies created by the Inflation Reduction Act and the Infrastructure Investment and Jobs Act passed during the Biden administration.

The legislation’s threats to U.S. energy affordability and reliability, industrial competitiveness, and economic growth are so stark that even President Trump’s one-time ally Elon Musk has vigorously attacked it. In a Saturday X post, he wrote that the Senate bill will ​“destroy millions of jobs in America and cause immense strategic harm to our country! Utterly insane and destructive. It gives handouts to industries of the past while severely damaging industries of the future.”

The toll of crushing clean energy 

Industry experts warn that the excise tax that penalizes companies using materials from China, a spin on restrictions first introduced in House legislation in May, is administratively unworkable. The rules are so byzantine that it would be impossible for solar and wind developers to accurately assess what they would owe, potentially leading to the cancellation of projects unwilling to chance a bigger-than-expected excise tax bill.

Analysis firm Rhodium Group previously projected that the House plans for repealing electricity tax credits would reduce new installations of clean capacity on the grid by 57% to 72% over the next decade. The new excise tax on wind and solar would add another 10% to 20% to the costs of those projects, the firm forecast over the weekend, leading to further financing challenges and likely resulting in even more canceled projects.

“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.

However, even fossil-fuel proponent Alex Epstein, who has played a pivotal role in Senate energy policy developments, pushed back on the excise tax on wind and solar in a Saturday X post. ​“I strongly recommend fully desubsidizing solar and wind vs. placing a kind of new tax on them,” he wrote.

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.”

The problem is particularly acute in the regions where gigawatts of new data centers are being planned to support tech giants’ AI ambitions.

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.”