House Budget Bill Threatens Clean Energy Credits, Wood Mackenzie Warns

• Draft House budget plan would phase out key solar, wind, storage and hydrogen tax incentives early, jeopardizing billions in U.S. clean-energy investment, analysts say.

A budget-reconciliation draft circulating in the U.S. House of Representatives could derail the country’s clean-energy build-out by stripping away the very incentives that have fueled it, according to fresh analysis from Wood Mackenzie.

The proposal, released by the House Ways and Means Committee, would wind down the investment and production tax credits for solar, wind and stand-alone storage far sooner than previously scheduled. Projects placed in service by 2028 would still receive the full benefit, but eligibility would slide to 80 percent in 2029, 60 percent in 2030, 40 percent in 2031, and disappear altogether in 2032.

Early termination is only part of the headache. The bill bans credit transfers—an increasingly popular financing tool—and tightens “foreign entity of concern” rules that would disqualify projects using Chinese components or minerals. “Those provisions touch nearly every segment of the modern clean-energy supply chain,” said principal analyst Sylvia Leyva Martinez. “Forecast downgrades are inevitable.”

Solar developers would feel the pinch first. Utility-scale growth could stall just as panel prices stabilize, while the planned elimination of the residential Section 25D credit after 2025 would hit rooftop installers. Extension of the manufacturing credit through 2031 offers a lifeline to domestic panel makers, yet the foreign-entity language could slam the door on Chinese-owned suppliers and spook investors.

Wind faces its own cliff. Wood Mackenzie expects a short-term surge as developers race to finish projects, echoing the boom of 2020–22. But shifting the qualification test from “start of construction” to “placed in service” adds schedule risk, narrowing pipelines and upping financing costs. Approximately 11 GW of onshore wind slated for 2025-27 could be delayed or cancelled.

Energy-storage players see even darker clouds. With 97 percent of lithium-iron-phosphate cathode material still sourced from China, “most battery projects beginning construction after 2026 would become ineligible for the ITC,” warned Allison Weis, Wood Mackenzie’s global head of storage. That could slow a sector widely viewed as essential for grid reliability.

Hydrogen is no safer. The proposed January 2026 sunset of the 45V production credit would jeopardize roughly 95 percent of announced green-hydrogen capacity, leaving only a handful of projects likely to proceed.

Even if the measure passes the House, it faces revisions in the Senate. Yet Wood Mackenzie says the uncertainty alone could chill near-term investment. “Developers can navigate changing tax rates,” Martinez noted. “What they can’t finance is ambiguity over whether a project qualifies at all.”