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Solar panels are seen at MCE Solar One solar farm in Richmond, Calif. President Donald Trump\u2019s phaseout of clean energy tax credits will make solar and wind projects more expensive, but some states are still committed to clean energy mandates (Justin Sullivan\/Getty Images).<\/p>\n
The abrupt termination of tax credits for clean energy projects is perhaps the most drastic blow that President Donald Trump has struck in his campaign against wind and solar electricity.<\/p>\n
As states brace for the uncertainty ahead, they are scrambling to get pending projects off the ground before the tax credits expire.<\/p>\n
\u201cThe real opportunities are making sure that the projects in the queue make their deadline,\u201d said Washington Democratic state Sen. Sharon Shewmake, who chairs the Senate Environment, Energy & Technology Committee. \u201cCan we speed that up? Can we make that easier for them?\u201d<\/p>\n
Shewmake, and leaders in other states, say they\u2019re focused on fast-tracking permitting decisions and working with regulators to ensure projects can connect to the grid.<\/p>\n
\u201cIronically, one of the impacts of the phaseout is that there\u2019s a rush to speed up the development of some projects in the short run,\u201d said Warren Leon, executive director of the Clean Energy States Alliance, a nonprofit coalition of state energy agencies.<\/p>\n
The tax credits were the linchpin for countless wind and solar projects in states aiming to get a large portion of their power from renewable energy. Leaders and advocates in those states say that renewable sources remain the best way to meet their electricity needs. But the loss of the tax credits could mean that residents pay more on their utility bills.<\/p>\n
\u201cThis will likely kill some projects,\u201d said Matt Abele, executive director of the North Carolina Sustainable Energy Association, an industry-supported nonprofit that backs clean energy policy. \u201cThe financial scenario for these projects is built around tax credits that were intended to be in place until the 2030s.\u201d<\/p>\n
But once the dust settles, many officials expect state laws and market forces to continue driving the buildout of wind and solar.<\/p>\n
\u201cWe still need to add electricity in this state, and wind and solar are still the cheapest way to do it,\u201d said Pete Wyckoff, deputy commissioner of energy resources with the Minnesota Department of Commerce. \u201cIt\u2019s a blow, but it doesn\u2019t change our energy policy, it doesn\u2019t change what is economically the right thing to do. But it\u2019s a big hit to our ratepayers.\u201d<\/p>\n
Under the Inflation Reduction Act, which President Joe Biden signed in 2022, developers received a 30% tax credit for investments in zero-emission energy projects, along with a production credit of up to 2.75 cents for every kilowatt-hour of clean electricity generated by the projects. Those tax credits were slated to extend into the 2030s.<\/p>\n
State officials and renewable energy industry leaders say the credits have been a major driver in the nation\u2019s rapid buildout of wind and solar, along with corresponding growth in manufacturing jobs.<\/p>\n
But the giant domestic policy measure Trump signed on July 4 abruptly ended those tax credits. Under the new law, projects must be up and running by the end of 2027 to qualify for the credits, or start construction by July 4, 2026. Projects that begin construction after that date must be operational by the end of 2027.<\/p>\n
Trump has falsely claimed<\/a> that wind and solar are \u201cexpensive and unreliable,\u201d and has at the same time worked to boost fossil fuel production. He has also taken aim at the fact that some renewable energy components are manufactured overseas, calling it a national security threat.<\/p>\n \u201cProjects in early to mid-stage development are deeply in danger if not completely cut off,\u201d said Harry Godfrey, managing director with Advanced Energy United, an industry group focused on energy and transportation. \u201cThis administration is finding a variety of ways to pull the rug on wind and solar.\u201d<\/p>\n While there may be a short-term burst of projects before the credits expire, the landscape becomes much more uncertain after that.<\/p>\n \u201cCertainly there will be some projects that are canceled, but the bigger issue is going to be new projects that don\u2019t get started because of the unfavorable environment for them,\u201d said Leon, of the Clean Energy States Alliance.<\/p>\n Industry leaders say it\u2019s too early to tell just how drastically the loss of the tax credits will slow their deployment of wind and solar. But they say states remain committed to laws that mandate a transition to clean energy. And building fossil fuel power, such as natural gas plants, is still slower and more costly.<\/p>\n \u201cYou don\u2019t build a natural gas plant overnight, and there are real supply chain constraints \u2014 you can\u2019t even get the parts,\u201d said Amisha Rai, senior vice president of advocacy with Advanced Energy United.<\/p>\n Rai and others noted that the country is seeing a surge in demand for new electricity, driven by the electrification of vehicles and buildings, as well as growth in data centers to support technologies like artificial intelligence.<\/p>\n \u201cMarket forces are going to continue to drive development of clean energy, the primary market force being significant demand for new electricity,\u201d said Abele, with the North Carolina group. \u201cIt\u2019s not going to come from natural gas, given that turbines are on back order through 2029. Solar, wind and battery storage are the quickest ways to add electrons to the grid.\u201d<\/p>\n Clean energy backers said Trump\u2019s efforts to block solar and wind undermine his \u201cenergy dominance\u201d agenda at a time when more power is needed. Ultimately, they believe the loss of the tax credits will cause higher electricity bills.<\/p>\n \u201cJust by the law of supply and demand, if you have growing demand and you don\u2019t have growing supply to keep up with it, that\u2019s going to lead to higher prices,\u201d Leon said.<\/p>\n According to a report<\/a> from Energy Innovation Policy & Technology, a nonpartisan think tank, the loss of the tax credits could increase electricity rates 9-18% by 2035, raising household energy costs by $170 annually.<\/p>\n Godfrey, the industry advocate, said that wind and solar projects may be canceled once the tax credits expire. But many of those same projects may be revived as rising electricity prices make their costs more viable.<\/p>\n Analysts have noted<\/a> that the clean energy boom brought on by the Inflation Reduction Act has largely benefited Republican-led states. But some lawmakers fear that developers will now focus their investments on Democratic states, where laws mandating a transition to renewable sources provide more market certainty.<\/p>\n \u201cWe\u2019ll probably see more of the investment go towards blue states that have those sorts of mandates,\u201d said Utah state Sen. Nate Blouin, a Democrat. \u201cThat\u2019s a loss for states like Utah, where we were seeing good new tax revenue, and agriculture folks making supplemental income [from wind and solar projects].\u201d<\/p>\n Lawmakers in states that do have mandates say they\u2019re still committed to meeting their goals.<\/p>\n \u201cWhen I heard that the Inflation Reduction Act was going to be repealed, I was devastated,\u201d said Shewmake, the Washington senator. \u201cBut then I started to look at the economics of the situation, and you realize this transition is going to happen. The federal government can slow it down, but this fight isn\u2019t lost.\u201d<\/p>\n Stateline<\/a> is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Stateline maintains editorial independence. Contact Editor Scott S. Greenberger for questions: info@stateline.org<\/a>.<\/em><\/p>","protected":false},"excerpt":{"rendered":" Solar panels are seen at MCE Solar One solar farm in Richmond, Calif. President Donald Trump\u2019s phaseout of clean energy tax credits will make solar and wind projects more expensive, but some states are still committed to clean energy mandates (Justin Sullivan\/Getty Images). The abrupt termination of tax credits for clean energy projects is perhaps…<\/p>\n","protected":false},"author":2,"featured_media":3572,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_kadence_starter_templates_imported_post":false,"_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3571","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"yoast_head":"\n\n<\/h4>
A slower, costlier transition<\/h4>\n\n