Renewable energy subsidies in the US are a key force in the country's clean energy transition, enabling cost savings. Over 500,000 incentives worth more than USD 70 billion are made available for projects with eligibility and potential. These incentives ensure renewable projects are more affordable and can help the country capitalize on its renewable energy sources.

According to Blackridge Research’s Renewable energy market report, the US holds immense renewable energy market potential. Even with the planned retirement of natural gas and coal-based plants, the US can efficiently achieve 80% power generation capacity through renewables by 2035. This growth is well-complemented by the deployment of 221 GW of battery storage between 2024 and 2035.

To unleash renewable energy potential and reduce dependency on fossil fuels, the US government has introduced subsidies that will promote renewable energy-based projects and help achieve clean energy transition goals.

In this blog let us uncover the benefits and eligibility criteria for renewable energy subsidies in the USA. Keep reading to know the way to let subsidies pay!

US Subsidies For Renewable Energy

The IRA (Inflation Reduction Act) is one of the pillars of the US's renewable energy subsidy. This act focuses on three main goals which are: 

• Reduce greenhouse gas emissions in the country.
• Promote domestic manufacturing of clean energy technologies such as solar panels and wind turbines.
• Accelerate the country's transition towards clean energy sources.

The IRA includes tax incentives, clean energy transition targets, funding & investments. 

IRA Tax Credits

The IRA tax credits are divided into two: 

• Investment Tax Credit (ITC)
• Production Tax Credit (PTC)

Clean Energy Investment Tax Credit (ITC): The investment tax credits allow taxpayers to reduce a percentage of the installation or building cost of renewable energy projects.

Clean Energy Production Tax Credit (PTC): It was established under Section 45 of the U.S. Internal Revenue Code, which offers a federal tax incentive for renewable energy-based electricity production. This tax incentive is applicable to all the projects that began its production operations after December 31st, 2021. The tax credit for PTC is as follows: 

The base credit is a standardized tax credit applicable to all renewable energy types. The full tax credit rate is five times more than the base credit and is eligible for renewable energy projects that meet specific wage and apprenticeship requirements.

These ITC and PTC tax credits are applicable to renewables such as solar, wind, municipal solid waste, geothermal (electric), and tidal energy. Detailed eligibility criteria for each renewable energy type are listed below:

Until 2025, the Inflation Reduction Act extends the Investment Tax Credit of 30% and Production Tax Credit of USD 0.0275/kWh (2023 value) for projects over 1 MW AC.

From 1st January 2025, the “Clean Electricity Production Tax Credit (PTC) & Clean Electricity Investment Tax Credit (ITC)” will replace the traditional “Clean Energy Production Tax Credit and Clean Energy Investment Tax Credit”. 

The renewable energy systems operational on or after 1st January 2025 are subject to the new Clean Electricity Production Tax Credit (PTC) & Clean Electricity Investment Tax Credit (ITC). These new tax credits apply to new generational systems and energy storage systems, too.

The tax credit provided is divided into two categories depending on the project capacity as follows:

To promote domestic manufacturing across the states of the US, bonus credits are provided, categorized based on the projects' greater or less than 1 MWAC (Megawatts alternating current).

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Bonus Credits

The bonus credits support promoting renewable energy projects in domestic and low-income communities. Based on the project's implementations, the bonus credits are divided into four categories:
 

Claim Incentives Worth USD 70 billion

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Clean Energy Transition Targets

Under President Biden's Executive Order 14008, "Tackling the Climate Crisis at Home and Abroad," the United States government has joined forces with federal departments in a bid to enhance renewable energy generation, including solar and geothermal energy.

Some of the initiatives are:

National Renewable Energy Expansion: Facilitating the US power market by promoting solar, geothermal and marine energy, onshore and offshore wind projects nationwide.

Targets on Offshore Wind Energy Deployment: The American administration targets 30 gigawatts of offshore wind energy deployment by 2030 and floating offshore wind energy by 15 megawatts by 2035.

Permits for Onshore Energy: Aim to provide over 25 gigawatts of permits for onshore renewable energy by 2025.

Five-Year Rolling Plans on Leasing of Offshore Wind Energy: Starting a plan with up to 12 offshore wind energy lease sales for sale within a five-year period to 2028.

Taking All Government Agencies Cooperation and Support: The US government collaborated with a wider range of various federal agencies in greater environmental renewable energy projects, development of goals, and federal energy subsidies across the nation.

Funding & Investments for Renewable Energy

Loan Programs Office (LPO)

In August 2022, the IRA was greatly expanded by increasing the total funds to USD 412 billion for lending. A new loan program called "Energy Infrastructure Reinvestment (EIR) Program" under section 1706 is being added by the IRAby IRA. This program will help retool, repower, repurpose, or replace currently operating energy infrastructure.

The LPO Portfolio as of 31st December 2024 is as follows: 

Recently, on 20th January 2025, President Donald Trump issued a new executive order halting USD 300 billion allocated to clean infrastructure projects under the IRA and Infrastructure Investment and Jobs Act (IIJA). This halt will directly affect the loans allocation and the manufacturing of EV vehicles. 

Advanced Technology Vehicles Manufacturing (ATVM) Loan Program

The Independence and Security Act of 2007 authorizes this program under LPO. This program provides loans to support the manufacturing of eligible vehicles and qualifying components.

Eligibility of Electric and Alternative Duel Vehicle Charging infrastructure

Manufacturing of infrastructure, including associated hardware and software components.

Applicable to alternative vehicle fuels such as: 

• Electricity
• Hydrogen
• Liquefied natural gas (LNG),
• Compressed natural gas (CNG), 
• Biofuels

Title 17 Clean Energy Financing Program

The Title 17 Clean Energy Financing Program was established under the Energy Policy Act 2005. This program was expanded by including the Infrastructure Investment and Jobs Act (IIJA) in 2021 and the Inflation Reduction Act (IRA) in 2022.

The program has a loan authority of USD 40 billion for the projects eligible under Section 1703 of the Energy Policy Act 2005. This program also includes a credit subsidy of USD 3.6 billion that will cover loan costs and administrative expenses associated with its operations. 

Eligibility 

This new loan authority is eligible for all the Section 1703 technology categories. 

Technology Categories 

• Renewable Energy Systems
• Advanced fossil energy technology
• Hydrogen Fuel Cell Technology
• Advanced nuclear energy
• Carbon capture & sequestration technology
• Efficient electrical generation, transmission & distribution
• Efficient end-used technologies
• Production facilities for the manufacture of fuel-efficient vehicles or parts
• Pollution control equipment
• Oil refineries
• Energy storage technologies
• Industrial decarbonization technologies
• Supply of critical minerals

Environmental Justice Initiatives Section 48(e)

The Inflation Reduction Act introduces Section 48(e), which aims to provide clean energy tax credits to disadvantaged populations and communities facing environmental justice issues. This provision ensures bonus credits that are specifically provided for wind and solar projects that meet the pre-stated environmental justice criteria.

Eligibility Criteria: 

• Project Size: The project size with a maximum net output of less than 5 MW, measured in alternating current, is eligible.
• Capacity Allocation: The program offers a 1.8 GW annual capacity limitation, measured in direct current for the years 2023 and 2024. This capacity is distributed in four categories, each with specific allocation limits. 

This categorization will be included in the ITC from 2025 until 2032. 

• Application Process: Projects must apply for an allocation from the Treasury Department. The Department of Energy (DOE) evaluates the applications and provides recommendations to the IRS that issue award letters to the successful applicants, thus allowing their projects to be in service.

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Biden's Renewable Energy Policies vs. Trump's Fossil Fuel Agenda

The renewable energy market has witnessed several shifts under the leadership of Presidents Biden and Trump. Under former President Biden's rule, the primary focus was on increasing renewable energy projects across the country. This included joining the Paris Climate Agreement, signing the Inflation Reduction Act (IRA) (2022), and several other measures. 
 

In contrast, the new US president, Donald Trump, prioritized fossil fuel production. On 20th January 2025, President Donald Trump declared a "National Energy Emergency" and signed several new orders, including halting USD 300 billion allocated for clean infrastructure projects under the IRA and Infrastructure Investment and Jobs Act (IIJA), as well as withdrawing the US from the Paris Climate Agreement.

New executive orders in place have profoundly impacted the renewable energy market, especially the onshore wind projects. Under the new executive orders, leasing and permitting for wind energy projects on federal lands has been halted,d shifting the focus to oil & gas development.

"Drill, Baby, Drill" for Oil & Gas

A new energy policy signed by President Donald Trump emphasizes increasing domestic oil & gas production. Thus, the shift in policies aligns with the new administration's goals of boosting fossil fuel production and reducing the reliance on renewable energy.   

Wrapping up

Renewable energy subsidies in the US are fueling the momentum toward the clean energy transition. Tax credits, bonus credits, incentives, and monetized tax benefits are inspiring new innovations and projects in the renewable energy market in the US. Several renewable energy projects like solar, wind, green hydrogen, and energy storage projects are witnessing growth supported by DOE energy subsidies. Thus, let the subsidies pay, keeping your project’s additional costs at bay!

FAQ’s

Does the US government subsidize renewable energy?

Yes, the US government subsidizes renewable energy through Investment tax credit (ITC), production tax credit (PTC), Clean energy tax credits, and many more.

What percent of US energy is renewable?

In 2024, renewable energy accounted for approximately 24% of the total energy in the US. This share is expected to increase to 26% in 2025, up from 21% in 2023.

What is the US government's policy on renewable energy?

The US government initially implemented the Energy Policy Act of 2005, which provided foundational law for tax credits and funding; currently, the IRA (Inflation Reduction Act) is implied for tax credits and subsidies on renewable energy.

Also Read: How Much Electricity Does A Solar Panel Produce?

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