NextEra, AES, EDP Renewables and other big solar and wind developers could benefit from last-minute changes to the Republican megabill. By Avi Salzman
The golden age of government support for clean energy is over. A new fraught era of energy policy has begun.
The Republican megabill repeals much of the Inflation Reduction Act and guts its funding. Gone are $7,500 electric-vehicle subsidies. Soon to disappear are credits worth 30% of the value of rooftop solar panels.
But last-minute changes to the bill cracked open a window just wide enough for well-capitalized companies to slip through. Big solar and wind developers like NextEra, AES, EDP Renewables, and Engie should be able to keep receiving tax credits for the next several years. Those companies are the workhorses of the renewable-energy industry, with enough solar and wind projects in their pipelines to power whole cities.
Sen. Lisa Murkowski, the Republican from Alaska, convinced Republican leadership to slip in a one-year delay to requirements that companies start construction on clean-energy projects to receive grandfathered tax credits worth 30% of the project's value. Under current policy, they have four years to finish those projects once they have begun. The new language in the bill opens up the possibility that projects that enter service as late as 2030 could receive credits, according to Morningstar analyst Tancrede Fulop.
"It's much better than some feared," Fulop says. Murkowski also got the Senate to rescind an excise tax that could have decimated wind and solar developers by penalizing projects that rely on Chinese materials.
The more-benign language led clean-energy trade groups to soften their previous statements on the bill, downgrading it from a disaster to a disappointment. They vowed to keep up their work. "The clean-energy industry will keep building, keep hiring, and keep innovating," says Ray Long, president of the American Council on Renewable Energy.
There's no question that the work of building clean energy will only get harder from here. The industry is a multifaceted beast that won't universally benefit from the latest version of the bill. Domestic solar manufacturers, for instance, reacted angrily about the softening of the anti-China language. Shares of First Solar, the largest U.S. solar manufacturer, fell on Tuesday after the Senate bill was passed. Other segments of the industry already faced recession-like conditions. The rooftop solar industry alone has seen several bankruptcies in the past year. The U.S. offshore wind industry has stalled out just as it was getting going, leading several developers to cancel projects.
Smaller solar and wind developers will face additional challenges. A decade of consistent policy has been replaced by what one solar developer calls "a solar-coaster" of changes. And all developers will face a maze of new rules designed to keep Chinese supplies and ownership out of the U.S. market, with some kicking in as soon as the bill passes.
Some clean-energy products are now being built in the U.S., helped by tax credits in the Inflation Reduction Act, but the precursor materials for those products are largely made in China. Even renewable developers who are trying to use only Made in America goods say it's impossible to make do without Chinese-made subcomponents like battery cells. "There's no real way around it," says Kevin Smith, CEO of renewable developer Arevon, which buys only U.S.-assembled batteries.
But for larger renewable developers, the rules appear to be just generous enough to allow them to continue production. They're benefiting from the fact that U.S. electricity demand is growing for the first time in decades because of artificial-intelligence data centers and other things. They're also the only option for near-term electricity generation. Trump loves coal, and has ordered some old plants to keep operating beyond their closure dates. But no new plants are being built. And natural-gas power generation is growing but faces a shortage of turbines that will slow its rollout. Nuclear, another technology that received favorable tax treatment in the Senate bill, has historically required a decade to build plants.
There aren't many other options to fill that gap. "We need a bridge, and that bridge has to come from renewables and storage," said NextEra CEO John Ketchum on the company's latest earnings call. Solar, batteries, and wind power are set to account for 93% of new electricity-generating capacity in 2025. Companies are planning a wave of additional projects in years ahead -- there are over 130 wind and solar projects in the queue that are set to start operating in 2028 or later, according to the Energy Information Administration. Those projects have 32 gigawatts worth of power capacity, enough to power 10 million homes or so -- or dozens of massive data centers.
Tech demand for clean power shows no sign of flagging, as those companies look to power AI data centers and adhere to low-carbon goals. An executive overseeing clean-energy deployment at Google owner Alphabet said last month that the company is moving full steam ahead. "We're really ramping up our procurement of wind and solar," said Michael Terrell, Google's senior director for clean energy and carbon reduction.
If the clean-energy projects can start construction on time, they can still get tax credits. Nuances in the tax rules give them an opening. Congress has historically allowed projects to qualify as "under construction" as long as the companies buy enough of the equipment they intend to use, a process known as safe harboring. In NextEra's case, the company said last year that it had safe-harbored its project pipeline through 2029.
NextEra, which also owns a regulated utility in Florida, has the largest renewables pipeline in the U.S., with projects all over the country. Several European power providers, like French utility Engie, have also invested heavily in building out renewables in the U.S., drawn by the generous tax credits. Fulop, the Morningstar analyst, thinks those European companies will keep building projects in the U.S., as long as they can get some clarity on tariff policy. He particularly likes German company RWE, which he thinks offers "the best risk/reward potential due to its diversified power generation portfolio."
The clock is ticking for renewable energy. But the latest bill shows little reason for panic.
Write to Avi Salzman at avi.salzman@barrons.com
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July 04, 2025 21:30 ET (01:30 GMT)
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