Senator Mike Crapo released draft text of the Senate Finance Committee’s version of the budget reconciliation bill on June 16. While the draft makes minor improvements to utility-scale solar incentives, it still takes a hammer to the IRA overall.
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- ITC/PTC (48E/45Y) projects can start construction by the end of 2025 for full ITC credit
- Credit phases down to 60% if construction starts by end of 2026, 20% if construction starts by 2027
- 48E/45Y projects can be placed in service by the end of 2029 for full credit
- Credit phases down to 60% if placed in service by the end of 2030, 20% by the end of 2031
- Energy storage projects under are exempt from accelerated 48E phase-down
- These projects would follow the original IRA phase-down schedule: In the later of 2032 or the year U.S. electricity-sector emissions fall to 25% of 2022 levels
- Preserves manufacturing tax credits (45X) as in original IRA plan
- Full value through 2029, 75% in 2030, 50% in 2031 and 25% in 2032
- Denies 48E credits to solar leasing companies starting 180 days after enactment
- Changes 48E domestic content requirements to 45% from June 16, 2025, through the end of the year, 50% for 2026, and 55% for 2027 and later
- Changes foreign entity “material assistance” requirements to qualify for 48E/45Y
- Eliminates residential ITC (25D) 180 days after enactment
- ITC/PTC (48E/45Y) projects can start construction by the end of 2025 for full ITC credit
The Senate draft budget includes some positives for the large-scale solar market, such as amending “start-construction” and “placed-in-service” requirements for the ITC and PTC (48E/45Y). The House version required projects to start construction within 60 days of bill enactment and be placed in service before December 31, 2028, to receive credits, but now the Senate is proposing projects can start construction through the end of the year and be placed in service by the end of 2029 for full credit.
While the Senate is sticking to an accelerated phase-out plan for solar and wind, it preserves credits for energy storage, hydropower, nuclear and geothermal. Energy storage projects under the ITC would follow the original IRA phase-down schedule: In the later of 2032 or the year U.S. electricity-sector emissions fall to 25% of 2022 levels.
The Senate version is aligned with the House in preserving manufacturing tax credits (45X) as in the original IRA plan.
On the residential solar side, the bill restricts solar leasing companies from collecting the ITC, and it still terminates the residential ITC (25D) around the end of the year — 180 days after bill enactment.
SEIA criticized the committee’s draft in a press statement.
“Despite modest improvements on several provisions, this legislation does not go far enough to remove the threat to one of the greatest economic success stories in American history. As drafted by the Senate Finance Committee, this proposal would pull the plug on homegrown solar energy and decimate the American manufacturing renaissance. This bill makes it harder to do business in America for U.S. manufacturers and small businesses and will undoubtedly lead us to an energy-strained economy with higher electric bills over the next five years,” said Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA).
“There’s still time to fix this so that solar and storage can continue to lower energy costs for families and business and ensure the United States wins the AI race against China. We call on the U.S. Senate to amend the Finance Committee proposal and unleash American energy dominance,” she continued.
Sen. Ron Wyden (D-OR), one of the architects of the IRA, joined a webinar hosted by advocacy group Climate Power on Tuesday morning to discuss the draft bill’s potential impacts. Wyden said Senate Republicans are trying to assert their budget version takes a more moderate approach, but if projections are accurate, their bill does almost 90% as much damage as the House bill would.
“This bill would be a stake in the heart of solar manufacturing in America. The manufacturing isn’t going to happen here, and it will happen in China,” Wyden said. “Projects all over the country are being cancelled as we speak this morning. The demand for energy is going into the stratosphere. Republicans are cutting off the best chance of producing the energy we need right now.”
Wyden said there is still chance for improvement, but it won’t be easy.
“It’s possible things will get better. But let’s be clear — people are going to need to make a lot of noise to make that happen,” he said.
Lori Lodes, executive director of Climate Power, pointed out that most of the Republican Senators who have spoken out in support of solar energy are not on the Senate Finance Committee. She believes there are more than enough solar supporters in the full Senate to force changes.
SEIA is holding a “Save Main Street Solar” rally today on Capitol Hill where solar workers and advocates will do just that and urge senators to protect energy tax credits and save their jobs.
Updated on June 18
This is legisation without repesentation because they are going to cut the residential incentive and keep the large UTILITY scale incentive. We all know and the numbers show that solar is less expensive than nuclear and most other forms of energery generation but residential is the best. The majority of the costs of energy is distribution, so instead of doing utility and shipping the solar, it is more cost effective when we can make it where it is used…the end of the grid. Stop pissing on our backs and telling us it is raining. Too many richmen paying of men North of Richmand but I guess it is nice to see our politician do what the highest bidder pays them to do. Who said they did not have standards.
” French King Louis XIV used to say: “Apres moi le deluge”. Translated into English, in not-so-many words: “Who cares what happens after I’m dead?” Does that sound familiar?
BINGO!!!!!
The movers and shakers of ‘today’ are asking the wrong questions. What we all should ask, is “What legacy do we leave to the next generation to inherit the Earth?” Solar PV and BESS, but, but, but what about mining and what do ‘we’ do with old and damaged panels, lithium ion batteries. For now it is called (DLE) direct lithiun extraction using ion exchange from geothermal generation plants tail water. Recycling Redwood Materials and Li-cycle in Canada are being (proactive) instead of “reactive” creating a sustainable, circular economy of recycled battery materials that don’t require mining and refining at all. Companies like werecyclesolar are growing as well as First Solar that has had a cradle to cradle panel recycling program in place since 2003.
“On the residential solar side, the bill restricts solar leasing companies from collecting the ITC, and it still terminates the residential ITC (25D) around the end of the year — 180 days after bill enactment.”
Here’s the ‘thing’, Utility scale generation at the wholesale gird rates or the residential bundled energy used (per kWh) and loaded with transmission, interState tariffs, delivery fees, administrative fees, environmental and any State or local energy taxes tacked onto the monthly electric bill skews the ROI AND the amortization of a residential vs a utility scale project amortization.
I’ve been using “grid tied” solar PV for 20 years now. In 2005 the first system installed on a home with a substantial subsidy from the local Utility combined with at the time capped Federal tax allowance of $2K allowed me to install solar PV on the home for $6/watt in 2005. Since I was still living in that home in 2017 when I installed solar PV on the home I’m in now, I could NOT use the 30% ITC as this home at the time was a “secondary home”. I had twice as much solar PV installed on this house in 2017 (without subsidy) of $3.50/watt.
The first home the simple ROI was 22 years till payoff. In actual use it paid for itself in energy costs in 13 years of use. This new home the simple ROI was on the order of 14-15 years, so far with electricity rate increases it looks like the system will pay for itself by 2026-2027. The more important thing moving forward is finding companies on top of the “Tariff Cudgel” and find companies like Heliene, Boviat and the tariffs on some of the Malaysian countries are “relatively low”, so those panels are viable for a low cost system array if chosen “carefully”. One needs to discover what panels are AD/CVD tariffed for materials used, no matter where they are assembled. It seems Tariffs and Solar PV construction have an unhealthy ‘synergy’ one must navigate to get the best bang for the buck, with or without subsidies. This is a marathon, not a sprint.
Being Canadian, I probably should not speak out publicly on this subject concerning US energy policy. Unfortunately, we in Canada are facing very similar situations where governments just don’t seem to see the dire need for affordable, cleaner energy. Promoting hydro and especially nuclear energy and calling it “green” is nothing but a blatant lie, and I’m deeply shocked that a large part of the population around the world is buying into that falsehood. This “Green label” has been misused by industries for the creation of more sales and higher profits. This is a clear sign of humanity being ignorant and careless. In the 17th century, French King Louis XIV used to say: “Apres moi le deluge”. Translated into English, in not-so-many words: “Who cares what happens after I’m dead?” Does that sound familiar?