Wind, Solar Credits Set to End Early in Senate GOP Tax Bill
(Bloomberg) -- Senate Republicans released a bill that would end tax credits for wind and solar earlier than for other sources, and make only modest changes to most other incentives, dashing hopes of those seeking relief from major cuts passed by the House.
Shares of solar stocks were the worst performing group in premarket trading after proposed text of the bill was released. Sunrun Inc. plunged as much as 27%, while SolarEdge Technologies Inc. dropped as much as 21%. Enphase Energy Inc slid 17%.
“It appears Senate Finance has taken this bill from a flat D to a solid D+ for the clean energy industry,” said Ethan Zindler, an analyst with BloombergNEF and a Treasury Department official during the administration of former US President Joe Biden. “And that may be with a bit of grade inflation factored in.”
While the new version of the bill does not include language that would have required projects to be under construction within 60 days to be eligible for the credits, it still would end incentives for wind and solar in 2028. Tax breaks of other sources of power, such as nuclear, hydropower and geothermal, would be allowed to remain until being phased out in 2036, according to a summary of the legislation.
The legislation, which is part of US President Donald Trump’s multi-trillion dollar signature economic package, would pare back credits from the Inflation Reduction Act. A popular $7,500 credit for the purchase of electric vehicles would be eliminated 180 days after the bill becomes law, as opposed to at the end of the year for most vehicles in the House version.
The Senate version would eliminate an incentive that provides as much as $3 per kilogram of hydrogen production, despite a lobbying blitz from companies that included producer Plug Power Inc., the American Petroleum Institute, and the Fuel Cell & Hydrogen Energy Association.
The Senate bill also would end credits for companies like Sunrun that lease rooftop solar systems as well as homeowners who buy them outright. Analysts say the elimination of the credits would decimate the reeling solar industry, with uncertainty over clean energy credits already causing disruption, including triggering the bankruptcy of Solar Mosaic Inc., one of one of the largest home solar lenders.
The Senate bill would rescue a tax credit for nuclear power. Under the House version, projects would have needed to have been under construction by the end of 2028 to receive the credit, a deadline analysts said was unworkable.
Unlike the House version, the Senate legislation does not include limits on the ability of project sponsors to sell tax credits to third parties, which makes credits easier to use.
The Senate’s proposal drew consternation from environmental and clean energy groups, including the American Clean Power Association which said the bill “would increase household electricity bills and threaten hundreds of thousands of jobs across the country.”
“Absent reasonable time lines for businesses to adjust to increasing taxes, good paying jobs, technology innovation, and AI data centers will be driven overseas,” Jason Grumet, the group’s chief executive officer said in a statement.
Changes remain possible to the bill, which the Senate is aiming to pass and quickly send back to the House for final approval by July 4.
(Updates stock moves with premarket trading.)
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