Senator Mike Crapo released draft text of the Senate Finance Committee’s version of the budget reconciliation bill on June 16. While the draft makes minor improvements to utility-scale solar incentives, it still takes a hammer to the IRA overall.
Senate budget bill proposals
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- ITC/PTC (48E/45Y) projects can start construction by the end of 2025 for full ITC credit
- Credit phases down to 60% if construction starts by end of 2026, 20% if construction starts by 2027
- 48E/45Y projects can be placed in service by the end of 2029 for full credit
- Credit phases down to 60% if placed in service by the end of 2030, 20% by the end of 2031
- Preserves manufacturing tax credits (45X) as in original IRA plan
- Full value through 2029, 75% in 2030, 50% in 2031 and 25% in 2032
- Denies 48E credits to solar leasing companies starting 180 days after enactment
- Changes 48E domestic content requirements to 45% from June 16, 2025, through the end of the year, 50% for 2026, and 55% for 2027 and later
- Changes foreign entity “material assistance” requirements to qualify for 48E/45Y
- Eliminates residential ITC (25D) 180 days after enactment
- ITC/PTC (48E/45Y) projects can start construction by the end of 2025 for full ITC credit
The Senate draft budget includes some positives for the large-scale solar market, such as amending “start-construction” and “placed-in-service” requirements for the ITC and PTC (48E/45Y). The House version required projects to start construction within 60 days of bill enactment and be placed in service before December 31, 2028, to receive credits, but now the Senate is proposing projects can start construction through the end of the year and be placed in service by the end of 2029 for full credit.
While the Senate is sticking to an accelerated phase-out plan for solar and wind, it preserves credits for hydropower, nuclear and geothermal.
The Senate version sticks with the House in preserving manufacturing tax credits (45X) as in the original IRA plan.
On the residential solar side, the bill restricts solar leasing companies from collecting the ITC, and it still terminates the residential ITC (25D) around the end of the year — 180 days after bill enactment.
SEIA criticized the committee’s draft in a press statement.
“Despite modest improvements on several provisions, this legislation does not go far enough to remove the threat to one of the greatest economic success stories in American history. As drafted by the Senate Finance Committee, this proposal would pull the plug on homegrown solar energy and decimate the American manufacturing renaissance. This bill makes it harder to do business in America for U.S. manufacturers and small businesses and will undoubtedly lead us to an energy-strained economy with higher electric bills over the next five years,” said Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA).
“There’s still time to fix this so that solar and storage can continue to lower energy costs for families and business and ensure the United States wins the AI race against China. We call on the U.S. Senate to amend the Finance Committee proposal and unleash American energy dominance,” she continued.
