The Senate Finance Committee has released a revised version of the budget bill initially passed by the House, dialing back some of the most severe cuts to the Inflation Reduction Act (IRA) but keeping tough limitations in place for wind and solar tax credits.

Under the Senate's proposal, projects that rely on the IRA's 45Y and 48E clean energy tax credits must begin construction by the end of 2025 to receive full benefits. For wind and solar developers, that requirement could shut out major future projects.

“For wind and solar, you have particularly large-scale projects that are very much in development,” said Harry Godfrey, who leads federal policy at Advanced Energy United. “They’re in interconnection. They are in permitting processes that have pilot agreements, but they are likely not to go to construction until ’27 or ’28, so this effectively kills those projects.”

In contrast to the House bill’s 60-day construction deadline and a service-in-place requirement by 2028, the Senate’s version allows clean energy projects—including nuclear, geothermal, and hydropower—to qualify for tax credits as long as construction begins by 2033. Wind and solar, however, face a separate schedule: 60% of the credits if they break ground by 2026, 20% by 2027, and none thereafter.

The Senate also proposed sunsetting the 30% 25D tax credit for residential solar and batteries just 180 days after the bill is signed by President Donald Trump—a move Godfrey warned could damage the residential sector on multiple fronts.

“Manufacturers are telling me, ‘I don’t know whether I [will] keep manufacturing in the U.S. if I don’t have a certain degree of certainty about that demand, or at least enough time to be able to transition accordingly’,” he said.

Godfrey added that while the Senate bill improves on the House version by switching to a “commence construction” requirement and expanding credit transferability, it still poses major timing risks for renewable energy developers. “Project developers, if they have a project online where they think that this creates uncertainty and imperils their project, should be calling their [representatives] and making it abundantly clear what is at stake here,” he said. “We’ve certainly heard receptivity [in the Senate] … I think there are the numbers there to move this in the right direction.”

The Senate version also keeps intact the original timelines for 45Q carbon capture and 45X advanced manufacturing credits, avoiding the 2028 sunset approved by the House. However, wind component eligibility for 45X would still end in 2027 under both versions.

On the controversial issue of “foreign entity of concern” (FEOC) restrictions, the Senate bill offers a new framework based on a “material assistance cost ratio” that mirrors the domestic content bonus system. Crux, a clean energy finance platform, said the Senate approach “takes a fundamentally different approach from the House” and is “clearer and more workable,” though it “will introduce a material, novel compliance burden that could fundamentally constrict the number of qualifying projects.”

Godfrey remains optimistic that changes are still possible as the Senate continues negotiations. “I don’t think this cake is baked yet,” he said.

Industry Reactions and Market Impact

‍Investment analysts were mixed on the bill’s implications. A research note from Jefferies noted, “Overall, we view [the] Senate’s version as a negative for [Sunrun, SolarEdge Technologies, and Enphase Energy,] but do note the potential for storage to still be eligible for 48E under lease … We view the Senate’s version of changes to IRA as modestly positive with phase out reintroduced for 48E/45Y. Storage fully unphased out: excellent outcome for [NextEra Energy].”

As the bill progresses, energy sector leaders and advocates are urging affected companies and stakeholders to engage directly with lawmakers to seek adjustments, particularly for wind and solar project timelines.

Originally reported by Diana DiGangi in Construction Dive.