What the Senate's reconciliation bill means for clean power

The bottom line is that the Senate text will lead the U.S. to build less clean power, it will be more expensive, and power prices will rise. The grid will be less reliable, possibly leading to power shortages and blackouts for American households and businesses.

There’s still much that we do not know, and the required guidance on this front could take months for the U.S. Treasury to develop. Despite the challenges, the bill offers a path forward to safe harbor equipment over the coming year, to work with suppliers on sourcing strategies, with customers on offtake, and to provide flexible capital to partners who need it. The diversity of Generate’s portfolio is helpful here: while wind and solar generation took a huge hit, other important technologies fared better. Power scarcity and rising prices make microgrids and energy efficiency more attractive to customers, with the return of the ITC for fuel cells providing another boost. Battery storage retains the full tax credit through to 2033 and phases out fully by 2036. Technologies such as geothermal and nuclear similarly have a longer runway and we’re eager to help them scale.

One of the most promising pieces of the bill is the treatment of dairy waste as a source of energy. The Senate version extended deadlines where tax incentives could be claimed to turn manure into Renewable Natural Gas (RNG). That extension, plus clear language directing the Treasury department to recognize the contribution that RNG plays in reducing methane when pricing the credit, gives American farmers a meaningful chance to participate in domestic energy development.

The negative effects of the bill will not take long to show up for voters. Repealing clean energy technology-neutral tax credits could raise average U.S. residential electricity prices by nearly 7% by 2026, and by 10% for U.S. businesses according to a report from the Clean Energy Buyers Association. Reliability will drop: a Goldman Sachs June 2025 scenario shows that U.S. reserve margins could be near zero by 2029, and increasingly negative thereafter if renewable energy installations cease from 2028 onwards. And more projects that were going to be constructed will be cancelled. The North America Building Trades Union estimates that the bill threatens 1.75 million construction jobs and $148 billion in lost annual wages and benefits. Other leading trade unions such as the International Brotherhood of Electrical Workers (IBEW) issued similar warnings.

While the Tip O’Neil foundational political adage that “all politics is local” is often obscured in the age of social media and global information flows, at its core, it’s right. Access to affordable, reliable power and well-paying jobs (alongside healthcare and other core measures) has consistently remained high on voters’ priorities. Ultimately the impact of the bill will be to move decisions down the federal chain from Congress to states, counties, and cities. Because economies run on power, because voters care about their power bills, and there is no alternative. Projects are built locally, and state and local governments have a much closer relationship with the impacts on communities than Congress does. They are the first to experience power price shocks and the impacts of cancelled projects. They are less likely to frame policy making decisions in the generalities of “climate change” and more likely to anchor those decisions on the economic and social realities of their constituents.

Local officials have an opportunity here to provide the certainty that has evaded Congress. Investors crave certainty. The whiplash of drastic policy changes to the core tax provisions that help finance physical infrastructure make future U.S. investment decisions across all asset classes and sectors more difficult. Budgets are tight and we cannot expect states and local communities to fully make up for the lost financial support. We need these policymakers to focus on minimizing the friction in the system that prevents clean energy technologies from scaling even quicker, despite being cheaper.

Generate and many of our peers have a strong record of working with local regulators and communities to put steel in the ground. There are programs that can help attract investment and those should be pursued with long-term certainty. Across the country, many market policies and designs are not optimized for the modern energy system Americans need. Efforts exist such as through the Regulatory Assistance Project or PowerLines to modernize our utility regulatory system, but more support is required. Regions that creatively and quickly solve these challenges will in return attract projects and investment and mitigate the worst outcomes of Congress’ actions. Remove this friction and the underlying fundamentals of our industry will speak for themselves.

A decade ago, the industry may have withered in the face of this assault. Today, the lack of available, scalable, and cost-competitive alternatives will ensure that investment in clean energy technologies continues, even if the economics and deal structures change. A decade ago, the goal was to bring these technologies down the cost curve. Today the focus must be to remove the friction on the ground. There are cost savings to be found across the industry as federal support winds down. A single-minded focus on delivering affordability and reliability will make the sector more efficient, more scalable, and more investable. It will reset the terms of the energy transition in a way that is ultimately impossible for policymakers to dispute.