A last-minute provision added to President Donald Trump’s spending bill has sparked outrage among clean-energy developers and business groups. The provision introduces a new tax on solar and wind projects, compounding existing challenges such as the phaseout of renewable tax credits by 2027 and stricter requirements to claim them. Experts argue the timing couldn’t be worse, as the U.S. power grid braces for rising demand driven by emerging technologies like AI.
Analysts warn that the new tax could significantly derail renewable energy expansion. Clean power sources—solar, wind, and long-term battery storage—have been the backbone of recent electricity additions to the grid, comprising about 85% of current development plans. Modeling by the Rhodium Group showed that maintaining Biden-era tax credits could have added between 400 and 1,100 gigawatts of clean energy by 2035, a figure now in jeopardy.
The new tax is expected to increase electricity costs, as it hinders the most cost-effective forms of power. Experts say that with wind and solar projects stymied, utilities may turn to more expensive alternatives like natural gas or prolong the life of aging coal plants. These shifts would lead to higher consumer electricity bills and jeopardize the grid’s ability to meet surging demand, especially as AI data centers drive a steep increase in energy consumption.
Industry Leaders Warn New Tax Threatens Jobs, Growth, and Affordable Clean Energy Access
Key industry figures have slammed the proposed tax. Princeton professor Jesse Jenkins estimated it could raise solar project taxes by 18%, calling it “utter insanity.” Elon Musk warned it could destroy millions of American jobs and inflict strategic harm. Even the U.S. Chamber of Commerce, generally supportive of the broader bill, opposed the tax, emphasizing that taxing any form of energy production—fossil or renewable—is bad policy amid growing demand.
New Clean Energy Tax in Trump’s Spending Bill Sparks Backlash Over Higher Costs and Grid RisksRenewables trade organizations expressed deep concern over the Senate’s weekend changes to the bill. The American Clean Power Association criticized the move as damaging to consumers and economic growth. Abigail Ross Hopper of the Solar Energy Industries Association called it a “punitive measure” and a “blanket penalty” on solar energy, warning of its potential to raise costs nationwide during an affordability crisis.
Clean Energy Tax Could Backfire, Strengthening China and Raising U.S. Energy Costs
Supporters of the bill argue the tax is part of a broader plan to eliminate Chinese components from U.S. supply chains. However, analysts warn the move could backfire. With the U.S. clean energy sector weakened, China could become more dominant in manufacturing and data center hosting. States like Texas—leaders in both fossil fuels and wind energy—could be economically impacted despite Republican support for an “all-of-the-above” energy policy.
Despite the uproar, the fate of the new tax remains uncertain. Political analysts suggest it may be revised or scrapped during amendment negotiations. While Trump’s administration maintains an “all-of-the-above” energy strategy that includes renewables if they meet market tests, independent modeling shows that the bill—even without the new tax—would raise household energy costs by up to 18% in red states by 2035 due to cuts in clean energy and electric vehicle incentives.
