It’s a 180 on everything that was accomplished or expanded upon as part of the Inflation Reduction Act. I think it’s a misunderstanding that a lot of the tax credits that were embedded in the IRA were established through the IRA. In fact, they were established 20 years prior with the Clean Energy Act in 2005. But the IRA extended, expanded, and embedded those tax credits—notably, the Energy Efficient Home Improvement Credit and the Residential Clean Energy Credit, or 25C and 25D, to use the tax codes—and extended those through 2032. It really popularized these incentives to push homeowners and contractors and manufacturers to invest a lot in these industries, to invest in solar and battery storage and wind and renewables and everything across the board with clean energy investments. It was a big deal.

I agree with you that the IRA’s rollout was a bit bumpy. It wasn’t how the Green New Deal was envisioned. There were concessions, but I would argue its biggest fault was that the Biden administration did a lousy job of promoting what it was and what it had accomplished. No one to this day knows what the Inflation Reduction Act is, and they should. It was a momentous piece of legislation, and it’s getting burned to the ground by an arguably bigger piece of legislation. 

Not all of them. The biggest thing that is going to get eliminated at the end of this year is the 25D credit, which is commonly known as the residential solar tax credit. It offers consumers a 30% tax credit on any solar that’s installed on their rooftops or on their property. 

Battery storage plugins, residential plugins, EV incentives, etc., those tax credits go away at the end of 2025. Others are getting phased out. For example, commercial solar projects or residential solar that is third-party owned—meaning, if you’re leasing or entering into a power purchase agreement (PPA) to put solar on your roof—the tax credits associated with those aren’t going away immediately. If you’re installing them after July 4, 2026, a year after BBB was signed, then it must be completed by the end of 2027 to qualify for a 30% tax credit.

Yes. The existing tax credit was extended and expanded with the IRA in 2022. All of these tax credits were supposed to sunset in 2032. They were expanded because the tax credits in their previous forms were pretty limited in what they offered. They were nice incentives, but with some pretty conservative returns.

Originally, you would have a lifetime cap on a home efficiency credit of a few hundred bucks. Meaning: If you wanted to put new insulation in your home this year and add new doors and windows next year, and then get rid of your gas boiler and install a heat pump, all of that stuff, in past years you’d have a lifetime cap on that. It didn’t matter if you’re doing it sequentially year after year as your finances allow. The IRA increased the credit and established an annual cap, so there was more incentive for homeowners to phase home improvement projects rather than do it all in one fell swoop. Who can afford to do that? Who can afford to replace their HVAC system, add new insulation, new windows, new doors, a heat pump water heater, all at once? No, you phase it. And that was great about the tax credit. It was capped at 30%, one year after the next. That’s going away. 

Well, the Big Beautiful Bill, or I believe as you referred to it in an email, as a “big bag of bullshit” …

I do not disagree with that characterization. The BBB will basically make it harder for a lot of that stuff to come online, for it to be interconnected with the grid, because the interconnection queue on a lot of those big renewable projects is already bottlenecking. This administration has demonstrated little appetite for allowing any renewable energy developments to occur. But—and this may be my own foolish optimism coming to the fore—it will be impossible to put all the toothpaste back in the tube.

The global energy transition is going to continue moving in the right direction, but the United States will cease to be a leader in that transition. The Inflation Reduction Act was very rapidly positioning the U.S. at the vanguard of that movement. China is going to accelerate solar production. They’re going to accelerate offshore wind. They are going to be the global leader in the renewable energy transition.

The U.S. can still make headway. If we want to find positive takeaways in this legislation, there are some. It’s a win for the geothermal industry and for things like utility-scale battery storage projects. It also requires more domestic content in large commercial solar developments as they come online in the next few years—if those projects are going to qualify for the 48E 30% tax credit. So, in some ways, it’s incentivizing more domestic production of photovoltaics and the deployment of large commercial developments, even if it’s kneecapping homeowners and not giving them the incentives to add rooftop solar, which is also sorely needed. It’s a mixed bag, but the ultimate takeaway is that this is compromising the country’s position to be a global leader in renewable energy production and community clean energy investments.

Yes. For all of the talk of a manufacturing recession, or the idea that we don’t build things here anymore, we were building renewable energy manufacturing capacity, in large part due to the IRA, the CHIPS Act, the Bipartisan Infrastructure Bill. Those three key pieces of legislation passed by the Biden-Harris administration were supercharging domestic manufacturing and investing billions, particularly in the Rust Belt and Bible Belt states.

Well, go into bear mode, definitely. A lot of jobs are going to get lost as a result of this. But there are going to be a lot of installers and contractors who were in business prior to this legislation—and hopefully they continue to be in business, although probably not with the same profit margins. But there’s still going to be leadership at the state level. There will still be a lot of consumer rebates available for home efficiency upgrades, for installing solar, for purchasing a new or used EV, or installing battery storage on your property. Not every incentive is going away, but the federal support for many of those programs is gone. 

It’s going to be very hard for a lot of these companies to weather the storm, and harder for more of them to survive, especially for small business owners and small contractors. That’s the tough part. I live in Maine, a state that is made up almost exclusively of small businesses. It’s a lot of sole-proprietor LLCs or contractors with only a few staff. They’re out there, knocking on doors, selling energy audits and blower door tests, presenting the case for making people’s homes more efficient, cleaner, and healthier. 

For me, the biggest takeaway is this: almost 25% of U.S. electricity production comes from renewable sources. We’ve reached that! It’s hard to predict how much that number is going to increase in the next five years, or if it’s going to get smaller or remain stagnant. But the more renewables and energy storage that we bring online, and the more we’re able to co-locate large renewable energy infrastructure projects with large demands like data centers, the sooner we can achieve a cleaner, healthier, more reliable grid.

Featured image via PICRYL.