Senate votes to scale back solar tax breaks to send reconciliation bill to House
The solar industry is reeling after the Senate narrowly passed President Donald Trump’s far-reaching policy bill with a vote of 51-50. Vice President JD Vance broke the tie to send the so-called “One Big Beautiful Bill” back to the House of Representatives to approve changes to the legislation.
Using the “reconciliation” process, the bill passed with a simple majority. The nearly 1,000-page bill includes sweeping tax cuts and reductions to social benefits, as well as eliminating clean energy tax credits passed as part of the Inflation Reduction Act in 2022. The Senate bill would halt approximately $522 billion in investment and adds taxes for new wind and solar projects with supply chains tied to China.
Based on the updated bill text that the Senate released on June 28, the bill would impose new taxes that would freeze energy investments, reduce domestic energy production, and drive-up household energy costs, according to Jason Grumet, CEO of the American Clean Power Association (ACP).
“With no warning, the Senate has proposed new language that would increase taxes on domestic energy production,” Grumet said in a statement. “In what can only be described as ‘midnight dumping,’ the Senate has proposed a punitive tax hike targeting the fastest-growing sectors of our energy industry. It is astounding that the Senate would intentionally raise prices on consumers rather than encouraging economic growth and addressing the affordability crisis facing American households.”
Grumet said that the bill’s new taxes “will strand hundreds of billions of dollars in current investments, threaten energy security, undermine growth in domestic manufacturing and land hardest on rural communities.”
The bill would be detrimental to U.S. energy and manufacturing, said Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA).
“Despite limited improvements, this legislation undermines the very foundation of America’s manufacturing comeback and global energy leadership,” Hopper said. “If this bill becomes law, families will face higher electric bills, factories will shut down, Americans will lose their jobs, and our electric grid will grow weaker.”
Hopper argued that the legislation would “set back U.S. global competitiveness, destabilize our energy future, and weaken the very industries that power our economy and strengthen our national security,” adding that the bill would result in “surrendering the 21st-century tech race to China.” Furthermore, she highlighted the negative impact on energy costs and resilience of cutting renewable energy investment.
“As the House reconsiders this legislation, every member should ask themselves what kind of future they’re voting for,” Hopper said. “Our communities, our businesses, and our futures are on the line.”
Ray Long, president and CEO of the American Council on Renewable Energy (ACORE), detailed how the Senate bill impacts solar development in the United States.
“The Senate bill released overnight and which they expect to vote on and pass this weekend will undermine three goals that Republicans have prioritized,” Long said. “It increases everyone’s electricity costs at a time when prices are already high. It will result in hundreds of thousands of lost jobs and factory closures at a time when energy jobs were on the rise and factories were opening. And it will play into China’s hands by severely diminishing our ability to compete globally at a time when China is building all energy technologies in order to beat the U.S.”
Long added that the energy industry has been “clear-eyed” that changes to the tax credit structure of the IRA were coming.
“We’ve worked with policy makers on a reasonable phase out that would enable businesses to continue to complete projects that were already in the process of financing and development, that any changes would not strand the billions of dollars of private sector investments underway, and that policy changes would be prospective, not retroactive, consistent with long-held principles of U.S. law that have underpinned good legislative policy that incentivizes, and doesn’t penalize, the private sector investments that have driven our economic growth,” he said. “The Senate language violates all of these time-tested and honored principles.”
Long highlighted a recent 50-state report by ACORE to illustrate how devastating the rolling back of these policies will be to the United States.
“To be clear, the Senate language effectively takes both wind and solar electric supply off the table, at a time when there is $300 billion of investments underway, and this generation is among the only source of electricity that will help to reduce costs and keep the lights on through the early 2030s,” Long said. “Along with battery storage and natural gas, wind and solar are the only sources of electricity that can be built in time to meet our increasing thirst for more electricity. Taking these off the table not only increases costs and ensures supply shortages, it also ensures thousands of layoffs and factory closures.”
Meanwhile, Long said that China is taking the opposite approach to energy investment.
“Faced with the same need to increase electricity generation, China outspent the U.S. three-to-one in 2024 and built every technology, including wind and solar,” Long said. “Why? Because they know that all of these technologies together are a winning solution to balancing costs, increasing reliability, and beating the U.S.”
The bill returns to the House, where the original version passed by only one vote, 215-214. Representatives must now approve changes made in the Senate before Trump can sign the bill into law. There is a chance that more changes could be made, but the president is pressuring Congress to pass the bill by this weekend.
