Senate GOP bill spares nuclear and geothermal energy while hammering wind and solar

One month after the House passed its version of a reconciliation bill, Senate Republicans released their take on the budget bill Monday night.

The Senate Finance Committee’s language would take a sledgehammer to some parts of the renewable-friendly Inflation Reduction Act (IRA) while sparing others. 

Solar, wind, and hydrogen bear the brunt of the impact. On the other side of the ledger, geothermal, nuclear, hydropower, and long-duration energy storage emerge relatively unscathed. Carbon capture ended up somewhere in the middle.

Senate Republicans are moving to swiftly end residential solar tax credits, giving people just 180 days after the bill is signed to claim them. Solar leasing companies would become ineligible for any credits, knocking out another leg from under the residential solar market.

Incentives for commercial wind and solar would see a longer timeline, though not nearly as generous as those under the IRA, which extend through 2032. The full credit would be available to projects that begin within six months of the bill’s signing. After that, they receive 60% of the credit if they commence construction in 2026 and 20% if they do so in 2027. The tax credit disappears after that.

Hydrogen tax credits would end this year, matching the version that passed in the House. The move adds yet another hurdle for hydrogen startups, which have been buffeted by continually shifting policies over the years.

Carbon capture was spared, though the details would change. The main 45Q tax credit currently differentiates between uses of the captured carbon, with companies using it for enhanced oil recovery receiving less money, for example. The Senate GOP’s language does away with the distinction, making all carbon capture projects eligible for the same incentives. 

Other technologies like nuclear, geothermal, and hydropower receive a slight extension of the phase-out of tax credits. Now, projects that begin construction in 2033 receive the full credit, one year longer than the IRA. It begins to phase out thereafter, dropping to 75% of the tax credit in 2034 and 50% in 2035 before disappearing in 2036.

The moves are largely in line with GOP priorities to kneecap wind and solar while preserving nuclear and geothermal. The lifeline for long-duration energy storage was perhaps the most surprising addition, and if it makes it through the reconciliation process intact, it could indirectly boost wind and solar by making them more appealing as 24/7 sources.

This isn’t the last word, though. The bill can’t be signed by President Donald Trump as is. First, it must pass the Senate parliamentarian before heading to the House, which has set a July 4 deadline to pass the full package.