Senate Republicans stepped up their attacks on U.S. solar and wind energy projects by quietly adding a provision to their megabill that would penalize future developments with a new tax.
That new tax measure was tucked into the more than 900-page document released late Friday that also would sharply cut the tax credits in the Inflation Reduction Act for solar and wind projects. Those cuts to the IRA credits were added after a late-stage push by President Donald Trump to crack down further on the incentives by requiring generation projects be placed in service by the end of 2027 to qualify.
The new excise tax is another blow to the fastest-growing sources of power production in the United States, and would be a massive setback to the wind and solar energy industries since it would apply even to projects not receiving any credits.
“It’s a kill shot. This new excise tax on wind and solar is designed to fully kill the industry,” said Adrian Deveny, founder and president of policy advisory firm Climate Vision, who helped craft the climate law as a former policy director for Democratic Senate Leader Chuck Schumer.
Analysts at the Rhodium Group said in an email the new tax would push up the costs of wind and solar projects by 10 to 20 percent — on top of the cost increases from losing the credits.
“Combined with the likely onerous administrative reporting burden this provision puts in place, these cost increases will lead to even lower wind and solar installations. The impacts of this tax would also flow through to consumers in the form of higher electricity rates,” Rhodium said.
The provision as written appears to add an additional tax for any wind and solar project placed into service after 2027 — when its eligibility for the investment and production tax credits ends — if a certain percentage of the value of the project’s components are sourced from prohibited foreign entities, like China. It would apply to all projects that began construction after June 16 of this year.
The language would require wind and solar projects, even those not receiving credits, to navigate complex and potentially unworkable requirements that prohibit sourcing from foreign entities of concern — a move designed to promote domestic production and crack down on Chinese materials.
In keeping with GOP support for the fossil fuel industry, the updated bill creates a new production tax credit for metallurgical coal, which is used in steelmaking.
