Senate reconciliation bill is a ‘stake in the heart’ of US solar manufacturing, senator says

Wyden is one of the authors of the tax incentives for clean energy introduced under the Biden administration’s Inflation Reduction Act (IRA) . The “One Big, Beautiful Bill” currently being drafted in the Senate is on track to repeal many of those credits for renewable energy deployment and manufacturing unless “substantive” changes are made.

The draft of the bill released earlier this week begins removing the IRA’s 30% investment tax credit (ITC) and production tax credit (PTC) from 2026, with a sharp decrease over the next two years until they are out of commission in 2028. This is more moderate than the version of the bill that passed the House of Representatives but has still been met with consternation from clean energy advocates.

The bill largely preserves the Section 45X Advanced Manufacturing credit for solar manufacturing, but caveats around foreign involvement may scupper its practical use.

‘Pick winners and losers’

“[The Senate] want everybody to believe that, after the flawed House bill, that they have come up with a much more moderate climate approach. The reality is that, if the early projections of the clean energy cuts are accurate, the Senate Republican bill does almost 90% as much damage as the House proposal did,” senator Wyden said. “Let’s not get too serious about this being a kinder, gentler approach.”

He continued: “This Republican effort in the Senate is a big, big departure from what Republicans have, for decades, claimed they are all about. Which is markets.

“Unleashing the free market was at the centre of the clean energy package I wrote in the IRA. It was called ‘technological neutrality’. It meant that the same set of rules would apply for everybody, and the markets go to work.”

Wyden argued that the new draft of the bill, which undoes the technological neutrality principle, effectively wants to “pick winners and losers” in the energy market, and “in the process, they’re going to hand the future of solar energy to China.”  

Speaking to reporters on Tuesday, energy and climate policy expert in Washington DC, Kristina Costa, said the Senate bill explicitly attacks clean energy production. She said the draft bill: “Slaps all clean energy technologies, both in generation and in manufacturing, with a thicket of red tape restrictions around sourcing and financing that simply don’t apply to any other sector of the economy.”

Foreign entities

The current bill draft preserves tax credits for energy storage, geothermal, hydro and nuclear technologies, but severely limits solar and wind provisions and decimates residential solar incentives.

The Senate draft of the bill proposes to largely preserve the 45X advanced manufacturing credit for solar, but contains language limiting the access of “specified foreign entities” and “foreign-influenced entities” to tax credits.

Exactly how the foreign entities language will work in real terms remains unclear, but in the House bill, the provisions for “material assistance” from foreign entities of concern (FEOC) were of particular concern.

The Senate bill proposes a ratio for calculating “material assistance” compared with “total cost”, but the specifics are, once again, unclear.

We do know that the international solar and energy storage industries are dominated by China and Chinese-backed companies. China will be one of the foreign entities specified in any form of the final bill, and the severity of the FEOC language could significantly impact the US’ ability to sustain or establish new solar and energy storage manufacturing capacity.

The current draft says that the 45X credit is inaccessible for products produced after 31 December 2025 that are “the subject of material assistance from a prohibited foreign entity”. Imported products, components or – as per the House bill – technology patents could fall under this provision.

It also denies the credit “if the taxpayer is a specified foreign entity or foreign-influenced entity”. This may amount to any company owned by, controlled by or engaged in “certain contractual agreements” with Chinese interests.

China currently dominates over 80% of the entire global solar supply chain. Excessive restrictions on engagement with that supply chain could significantly hamstring any US clean energy manufacturing.

US energy market platform Crux said: “Initial reactions to the Senate language largely see it as clearer and more workable than the House FEOC provision, but it still will introduce a material, novel compliance burden that could fundamentally constrict the number of qualifying projects across the credits, including for categories with broad bipartisan support”, such as 45X.

‘One of the great ironies’

Much of president Trump’s rhetoric and policy around trade has been ostensibly geared towards boosting US manufacturing capacity and delivering energy self-sufficiency.

Lori Lodes, executive director of US climate communications and lobby firm, Climate Power, said the impact of this Senate bill was “one of the great ironies.”

Right now, Trump is demanding every American pay more for everything [via tariffs], ostensibly to help American manufacturing, [but] he is deliberately killing hundreds of thousands of manufacturing jobs [in this bill],” said Lodes.

Jon Powers, founder of clean energy investor CleanCapital, said the “Big Beautiful Bill” legislation “is counterintuitive to the Trump agenda.”

He continued: “When you are cutting off the demand for things like panels, because we’re not going to have as many projects being built, we are significantly going to cut down on American manufacturing.”

Powers said that global competition, largely from Asia, will continue to grow and the US could fall behind if the bill passes in its current form.

The Senate bill is still in draft form, and Wyden said he and a group of other senators would “fight this battle until the last dog howls” to soften the blows to clean energy incentives.