The Republican-led House of Representatives has narrowly passed a giant tax and spending bill that would end Inflation Reduction Act subsidies for clean power years early.
The proposed changes threaten to unravel a variety of incentives that would result in higher prices for everything from electricity to solar panels.
The bill now goes to the Senate, where it will most likely undergo changes. Here’s what to know about what’s in the passed version of the House bill and how it might change in the Senate.
What are potential economic consequences?
A full repeal of the Inflation Reduction Act would cut GDP $1.1 trillion, cost hundreds of thousands of jobs and spike consumer energy bills, according to think tank Energy Innovation Policy & Technology.
While a number of clean energy projects would get canceled if the House bill passes in its current form in the Senate, others would re-negotiate contracts with utilities or corporate offtakers, according to BloombergNEF’s Americas Head Ethan Zindler. “The result would inevitably be higher priced power in substantial parts of the US,” he said.
How does the House bill affect clean energy incentives?
Solar
The cost of installing solar panels on your home would soar under the House bill as it eliminates a 30% federal tax credit for residential solar systems at the end of the year. The legislation also rescinds a 30% tax credit for home battery storage systems. Even if you rent your solar array, the cost is likely to spike as the bill immediately scraps a tax credit for companies like Sunrun that lease systems to homeowners.
“If I could see a knockout punch for solar, it would be if all of a sudden systems got 30% more expensive and payback times got 30% longer,” said Reuben Ly, sales manager for A1 Sun, a family-owned solar installer in Berkeley, California.
