Before the 2024 presidential election, clean energy companies and industry commentators were relatively bullish about the prospects for their field, irrespective of who might win and what that might mean in terms of possible policy changes.
The bedding-in of projects, the promise of subsidies and credits from then-President Joe Biden’s Inflation Reduction Act, and the simple fact of an increasing economic focus on clean energy — all these pointed to a rosy future based on some kind of certainty.
“Our upbeat outlook on the renewables sector is generally independent of questions about the future of green energy related to the potential impact of the upcoming U.S. elections,” private equity group KKR said in its report titled “Market Review Infrastructure June 2024.”
President Donald Trump’s administration, however, has thrown much into chaos, sources say, and even if green energy cannot be ditched completely because it is an economic success after all, such uncertainty is playing havoc with people’s confidence in the industry’s future.
The passage of the One Big Beautiful Bill Act in the House of Representatives, where the proposed cutting of tax credits and the large-scale repeal of the approximately $370 million Biden-era Inflation Reduction Act’s provisions have created uncertainty, is now weighing heavily on many people’s shoulders. Many players hope clearer heads will prevail once the bill gets to the Senate.
“From what we’ve seen and heard through industry contacts in Washington, there’s reason to believe that the bill in its current form is unlikely to pass the Senate without revisions,” said Landon Wimmer, the CEO of Empower Home Services, a home energy solutions company focused mainly on solar power in California, Arizona, and Texas. “We’re hopeful those changes will be more favorable to the clean energy sector.”
While things remain up in the air — the stated aim of lawmakers in the Senate is that the new legislation, in its final form, gets to the president’s desk in time for the July 4 holiday — most players remain highly concerned about the dicey future of industries such as solar and power, the incompatibility of that with meeting the nation’s increasing demand for electricity, and tackling climate change.
Various players are holding out hope that something less threatening actually gets signed into law.
The need for certainty
The push toward gutting elements of the IRA is chilling to many in the clean energy industry, particularly those who are financing early-stage projects and who may rely more on tax credits and subsidies.
While such possibly highly impactful bills remain in flux, that uncertainty is causing many clean energy businesses to possibly reevaluate their strategies, even though they have no firm idea of what may emerge.
“While operational and near-COD projects are less exposed, developers are reevaluating how future policy shifts could impact return on investment, tax equity appetite, and pipeline valuation,” said Zoe Gamble, president of CleanChoice Energy, a company that owns solar generation assets and provides clean power to consumers. “I see a lot of American solar developers worried that they will be put out of business.”
One major area of concern, too, is in the financing of certain projects for consumers.
Homeowners, for example, can go solar through leasing or power purchase agreement programs. These models rely heavily on the current 30% federal tax credit to keep pricing attractive for homeowners.
“If that tax credit were to disappear almost overnight, it would severely limit the financial viability of these programs,” Wimmer said. “Homeowners would no longer see the same level of savings on their utility bills, which would likely lead to a significant decline in interest and adoption of solar energy.”
Not to mention the overhanging threat of tariffs.
Many essential components needed to build wind farms, solar panels, and electric batteries are manufactured outside the United States and, as a result, are subject to possible and actual tariffs. Such tariffs are making materials more expensive and certainly adding to the uncertainty for people planning for such new assets. For a new nuclear project, for example, you’re talking 15-20 years of planning.
Meanwhile, the insatiable demand for energy from the AI industry can only compound the problem if things become more expensive. Not to mention the threat to climate change initiatives, which fall lower down the priority list in the race to implement energy-guzzling AI data centers.
“As we see in the Big Beautiful Bill Act, instead of turning to renewable resources as a means to power the next generation of AI, the new administration is putting its full weight behind oil and fossil fuels,” notes Aya Saed, director of AI policy and strategy at sustainable software group Scope3. “The United States will find itself in an energy crisis if renewable energy investments go on hold.”
Less worried?
Others are perhaps less concerned. Well-funded companies that do not rely overly on tax credits and subsidies have far less to worry about.
“You can see it in industry chatter on X — folks are worried about what happens if the tax credits dry up,” said Rabbi Yechezkel Moskowitz, founder of the Synergos Fund, a venture capital fund focused on sustainable tech, such as critical minerals, nuclear energy, and wastewater management.
“The administration’s going to back winners who make electricity, plain and simple, renewable or not,” he said. “If you’re profitable without needing a government check, you’re sleeping fine.”
Others go further, stressing that profitable clean energy companies face little threat. Enacting such legislation would level the playing field.
“The Trump administration’s recent policy shifts are a necessary course correction, not a threat to viable clean energy,” said Tracy Shuchart, senior economist at NinjaTrader, a retail futures trading platform. “These changes reflect a more realistic approach to energy security and reliability.”
They do so by showing up the relative unreliability of energy sources such as wind and solar in meeting electricity demand, not something that other sources of power have to worry about as much, she says. “Nuclear and natural gas will thrive under these policies,” she said. “This reset strengthens energy security, lowers costs, and offers a more sustainable future than continued reliance on unreliable renewables.”
But most remain concerned, even as the federal government may not have as much power as it thinks it has when coming up against market forces and the power of individual states and their promotion of renewable energy.
Solar to become major force?
The Energy Information Administration, for example, predicts that solar generation capacity will eclipse that of coal midway through next year and blow past wind power by the end of 2026.
Individual states, utilities, utility customers, industry partners, and local governments will continue to prioritize clean energy and pursue the economic and job creation opportunities that arise from the ongoing transition, said Lesley Jantarasami, the vice president of research and industry strategy at Smart Electric Power Alliance.
The momentum behind renewable fuels and decarbonization infrastructure is being driven by global market forces and strategic imperatives, not just policy, Cresta Fund Management’s Chris Rozzell added.
Historical precedent shows that during periods of federal environmental deregulation, state-level leadership becomes essential for maintaining progress, in this case, on climate goals, Saed added.
All that being the case, it would help if the federal government could be clearer about its goals.
Clarity and consistency from policymakers are critical to sustaining private investment at scale,” Rozzell said.
“Political vendettas and motivations have disrupted the industry in an unfavorable way — the outcome of Trump’s bill will either be the final nail in the coffin or offer a semblance of hope that political tides will not dictate the industry’s success,” U.S. Hispanic Business Council founder and CEO Javier Palomarez said.
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It’s a tough few weeks ahead, but little compared to what might be a course correction of some magnitude.
“The decisions made in the coming months could shape the trajectory of energy, economic equity, and environmental health for decades to come,” Wimmer said.
Nick Thomas is a writer based in Denver.