Senate Republicans intend to remove a controversial tax on solar and wind energy projects as part of their budget megabill, according to three people familiar with the plans.
Republicans’ final amendment to wrap in last-minute changes to the budget reconciliation bill will include a compromise for Senate hold-outs by removing the tax, as well as providing a carve-out from the tax credit phase-out for solar and wind projects that begin construction less than one year after the bill’s enactment, according to the three people, who were granted anonymity because they were not authorized to speak publicly.
The amendment would still require other solar and wind energy projects to be placed in service by the end of 2027, echoing language in the Senate’s updated text last week that could threaten hundreds of planned projects.
It would also make changes to complex requirements that prohibit sourcing from foreign entities of concern that companies had seen as unworkable.
The approach marks a potential compromise between camps of GOP senators who were divided on the phase-outs for the credits, including Sen. Lisa Murkowski, a key swing vote.
The excise tax on solar and wind generation projects was quietly added to the Senate’s budget reconciliation text last week, prompting widespread pushback from clean energy developers and advocates.
Under the new draft, solar and wind projects seeking the Inflation Reduction Act’s tax credits can begin construction within one year after the date of the bill’s enactment to qualify for the credits, but projects that begin construction after that would need to be placed into service before the end of 2027 to qualify for the credit.
Republicans released updated megabill text last week that would make sharp cuts to the climate law’s solar and wind tax credits by requiring projects seeking to claim the law’s clean electricity production and investment tax credits be placed in service by the end of 2027.
The changes to the bill were negotiated behind the scenes as an amendment from Sens. Joni Ernst (R-Iowa), Murkowski (R-Alaska) and Chuck Grassley (R-Iowa).
Sen. John Curtis (R-Utah) also played a key role in negotiating the changes, a person familiar with the talks said.
James Bikales contributed to this report.
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