A new U.S. Senate proposal seeks to fully phase out tax credits for solar and wind energy by 2028, shifting federal support toward hydropower, nuclear, and geothermal sources, a move that has drawn swift criticism from clean energy advocates and sent solar stocks tumbling.

Circulated Monday as part of a broader Republican-backed budget package, the draft legislation would reduce solar and wind tax credits to 60% of their current value by 2026 before eliminating them entirely by 2028. Meanwhile, tax incentives for hydropower, nuclear, and geothermal energy would be extended through 2036.

Industry Divided on Energy Incentives

The proposed changes prompted an immediate response from the renewable energy sector. Abigail Ross Hopper, president of the Solar Energy Industries Association, warned that the bill "does not go far enough to remove the threat to the solar industry," pointing to the potential stifling of solar adoption and investment.

Conversely, Malcolm Woolf, CEO of the National Hydropower Association, welcomed the extended credits for new hydropower projects. However, he criticized the Senate for failing to include tax incentives for upgrading existing hydropower facilities.

Shares in U.S. solar companies dropped following the announcement, reflecting investor concerns about long-term policy uncertainty.

Bill Details and Eligibility Changes

The Senate bill allows for the sale of tax credits, a flexibility not included in the more restrictive House version. It also introduces a new formula to determine whether a project has received "material assistance" from a foreign entity—a condition that could disqualify it from receiving federal tax benefits.

In addition, the Senate bill eliminates consumer-facing credits, including those for installing rooftop solar panels and other energy-efficiency improvements in homes, removing a key incentive that has supported residential adoption.

Senate vs. House Provisions

While the House bill requires clean energy projects to start construction within 60 days of enactment and be completed by the end of 2028, the Senate version offers a more flexible timeline. Under the Senate proposal, projects may still qualify for credits as long as they begin construction within a given tax year.

Despite these differences, both chambers appear aligned in shifting the focus of energy incentives, a move that could significantly reshape the trajectory of America’s clean energy transition. The bill’s future remains uncertain, with debate expected to intensify in the weeks ahead.

Looking to enter the U.S. wind turbine market? Gain direct access to the people driving the U.S. wind energy transition.

Subscribe to our U.S. offshore wind farm database and unlock:

• Comprehensive project details on both upcoming and planned initiatives

• Timely updates on tenders and new developments

• Access to key stakeholders and decision-makers

• Market insights and future trend analysis by experts

Book a free demo now and upgrade your business!