Energy Infrastructure Targeted in "Big, Beautiful Bill" Passed by House

While a Senate version of the bill is expected to differ from the House version, the bill currently maintains most of the cuts to clean energy tax credit proposed in the draft issued on May 12, 2025—which would swiftly phase out EV, hydrogen, and home energy tax incentives. Compared to the initial language, the passed bill treats transferability somewhat more favorably and expands incentives for nuclear energy, though both remain curtailed compared to existing law. 

However, the bill's latest version introduces many new challenges for manufacturers, developers, builders and consumers of US energy infrastructure as it advances to the Senate. The core business tax credits (48E and 45Y) are increasingly in the crosshairs and now face a rapidly accelerated timeline for repeal. As it stands, projects must commence construction within 60 days of the bills enactment to qualify for credits. The legislation also repeals qualification for leased or rented residential energy assets starting in 2026. 

Most critically, the FEOC requirements in the bill create an extremely complex set of thresholds for tax credit qualification. Ultimately, as written these requirements would freeze virtually all tax credit claims in the years they are proposed—particularly 48E, 45Y, and 45X credits.

US Energy Infrastructure at a Crossroads

The stakes are high: America's energy independence, manufacturing competitiveness, and economic future hang in the balance of these legislative decisions.

Without modification, the House bill will drastically constrain US energy infrastructure expansion—raising electricity prices and hindering economic growth. One analysis estimates America could face $285 billion in lost investment, 330,000 fewer jobs, over 300 closed factories, and a staggering $51 billion in additional consumer electricity costs.

To preserve energy security and competitive American industry, a Senate bill will need to improve the timelines for technology neutral energy tax credits and domestic manufacturing while substantially modifying the proposed FEOC rules for a tax credit market to function effectively.

Markets with the Most at Risk

Under existing law, 10 states hold over 58% of IRA investment potential for supporting power and electricity through 2030.

No state stands to lose more than Texas, where clean energy has been ascendant. Supported by an investment-friendly power market structure, and over $12bn of IRA investment to-date, Texas has become the largest clean energy market in the nation. The state is expected to build one-third of the nation's renewable and storage projects in 2025, with battery storage and solar representing the overwhelming share of recent and planned capacity additions statewide.

Looking forward, slowing clean energy deployment in the Lone Star state may impact more than energy markets. Economic growth, particularly from energy hungry data centers, is expected to drastically increase electricity demand in the state. Throttling clean energy investment just as key industries are relying on new energy infrastructure, may have compounding effects that impact economic growth.

Zooming-in past the state level, despite Republican-led repeal of the tax credits, it is likely Republican congressional districts that stand to lose the most investment from prospective changes. Republican districts have hosted 78% of new solar, wind and battery projects constructed since the Inflation Reduction Act's passage in August 2022. Pulling back clean energy incentives will erode the potential tax-base and increase energy prices in the districts that will miss out on clean energy investments.

The team here at Basis Climate will continue to closely monitor and provide updates as this bill advances through Congress.