GOP Bill Slashes Support for Renewables and Hydrogen, Preserves Incentives for Nuclear and Geothermal
Final Legislation Rolls Back Key Inflation Reduction Act Measures as Trump Signature Looms
Republican lawmakers have passed a sweeping reconciliation act that significantly rolls back incentives for solar, wind, and clean hydrogen—key elements of the Inflation Reduction Act (IRA)—while preserving tax benefits for nuclear and geothermal energy.
- The bill passed the House 218-214, with two Republicans opposing it, and now awaits President Donald Trump’s expected signature.
Solar, Wind, and Hydrogen Hit Hard by Incentive Cuts
Under the new bill, solar and wind developers must connect to the grid by the end of 2027 or break ground within 12 months of the bill’s passage to access remaining tax credits.
- This dramatically shortens the runway for project development and could slow new installations.
- Clean hydrogen startups face the biggest challenge, as tax credits up to $3/kg are now set to expire at the end of 2027—five years earlier than planned under the IRA.
Nuclear, Geothermal, and Batteries Retain Support
While renewables lose ground, nuclear, geothermal, and battery storage projects will continue to benefit from IRA tax incentives through the end of 2033.
- However, stricter rules on participation by “foreign entities of concern” may make these tax credits harder to obtain for some developers and investors.
Impact on Data Centers and Climate Tech
The bill is expected to hurt the data center sector, which has relied on fast-to-build solar, wind, and battery projects for inexpensive and flexible power.
- By limiting incentives for these technologies, developers could face longer wait times and higher costs as alternatives like natural gas turbines face backlogs into the 2030s.
- Climate tech startups, particularly those in green hydrogen, will also face a more challenging investment and growth environment.
Shifting the Landscape of U.S. Clean Energy
The new legislation represents a significant shift in U.S. energy policy, favoring nuclear and geothermal over newer renewable technologies.
- The rollback of IRA incentives could stall progress on clean energy deployment and complicate the business models of both large hyperscale developers and innovative climate tech startups.
- Industry observers warn that these changes may slow the nation’s clean energy transition and impact the U.S.’s ability to meet its climate targets.
