Federal Rollbacks On IRA Are Incoming

Author

Swarnav Pujari
July 01, 2025

Hi there,

Senate GOP’s “One Big Beautiful Bill” would sunset solar / wind tax credits by 2027 and impose strict anti-China sourcing rules—founders must re-price projects and diversify supply chains now.

At the same time, Maine pulled its 100% clean-power mandate to 2040 and New York ordered ≥1 GW of advanced nuclear, unlocking >$10 B in procurement. Reliability fears drove DOE to waive emissions limits for Duke amid a heat-wave, while Gridmatic’s AI-driven 10 MW ERCOT PPA shows mid-sized deals rewarding trading software. Three live RFPs (Appalachian Power, NYSERDA storage R&D, Massachusetts 1.5 GW storage draft) offer revenue opportunities for developers.

🔦 Signals Worth Monitoring

🔨Headline: Senate GOP Tax Bill Would Repeal Clean-Energy Credits

What Happened: The “One Big Beautiful Bill” released June 28 would phase out the IRA solar/wind ITC & PTC starting 2027 and slap new import tariffs on Chinese-linked equipment.

Why Founders Should Care: Be ready to re-price your entire pipeline. Given the lack of US suppliers for solar and wind components it will prove difficult to meet the stringent Foreign Entity Of Concern (FEOC) requirements and that may result in a tax hit. Read the Founder Briefing below for more information.

🔨Headline: Maine Pulls 100 % Clean-Energy Mandate Forward to 2040

What Happened: Governor Mills signed L.D. 1868, advancing the state’s RPS timeline by a decade and creating demand for ~7 GW of new renewables + storage.

Why Founders Should Care: Opens a mid-sized market where land, interconnection queues, and offshore wind optionality are founder-friendly compared with ISO-NE neighbors.

🔨Headline: DOE Issues Emergency §202(c) Order for Duke Energy During Heat-Wave

What Happened: On June 24 the Department of Energy temporarily waived air permit limits so Duke could keep fossil units running through a record Southeast heat dome.

Why Founders Should Care: Reliability now trumps emissions in crises; products that add flexible load, demand response, or fast start generation gain political tail winds and premium pricing.

🔨Headline: DOE Awards $15M to Three Long Duration Storage Pilots

What Happened: The Office of Electricity picked flow battery, thermal, and iron-air demos to run on federal sites, with data sharing MOUs that pave the way for larger LPO loans.

Why Founders Should Care: Even small DOE grants confer technical validation and site access. Use these awards as reference cases when pitching state programs or corporates hungry for 8-40 hour storage.

🔨Headline: Gridmatic Lands 10 MW ERCOT Solar PPA Optimized by AI Forecasting

What Happened: Gridmatic signed a deal June 26 with Sol Systems (IPP) to supply EdgeConneX; dispatch is steered by Gridmatic’s ML-based price models.

Why Founders Should Care: Mid-sized PPAs (5–20 MW) are proving grounds for algorithmic retailers. SaaS layers (like Gaiascope, acquired by Engie) that improve nodal forecasting or automate contract settlement can sell into this niche.

🔨Headline: New York Orders NYPA to Develop ≥1 GW Advanced Nuclear

What Happened: Gov. Hochul directed the state utility on June 23 to solicit SMR or other advanced concepts, citing reliability and CLCPA compliance.

Why Founders Should Care: Opens a state backed procurement avenue potentially worth >$10B. Non-nuclear founders should track supply chain and workforce programs that accompany the build. Nuclear gold rush may be arriving in the US markets.

📌 RFP Bulletin

See the RFP’s we discovered last week here.

Appalachian Power 2025 Wind, Solar, and Storage RFPs

Why it matters for founders: Large procurement opportunity in a utility territory likely to experience significant data center growth long term. Winning a part of this RFP could set you up for success in future procurements.

NYSERDA Energy Storage Technology and Product Development (PON 5984)

Why it matters for founders: This program supports innovative storage technology development, offering non-dilutive funding for R&D, prototyping, and commercialization—ideal for startups aiming to validate and scale new solutions in a major clean energy market.

Massachusetts 1,500 MW Mid-Duration Energy Storage Procurement (Draft RFP)

Why it matters for founders: A massive storage procurement with long term revenue certainty from a utility if you can win it. Unique to get in this early while the RFP is being drafted.

📝 Founder Briefing

The Capital, Washington DC

Senate’s “One Big Beautiful Bill” – Climate & Energy Highlights

The Senate rewrite of H.R. 1 keeps most IRA incentives alive for nuclear, geothermal, storage, and CCS—but speeds the exit ramp for wind, solar, hydrogen, and clean-tech manufacturing, while layering on tough “Foreign Entity of Concern” (FEOC) sourcing rules.

Clean Electricity Credits (45Y & 48E): The Senate Finance substitute to H.R. 1 preserves tech-neutral clean power credits through 2035 for most technologies but accelerates the sunset for wind and solar. Section 70512 phases down the Clean Electricity Production Credit (45Y) aggressively by 2027, with zero credit thereafter.

Likewise, Section 70513 limits the Clean Electricity Investment Credit (48E) for wind and solar until 2027 and then eliminates it in 2028.

Clean Hydrogen (45V): The Senate would end the Clean Hydrogen Production Credit for new facilities much earlier. Section 70511 amends 45V’s sunset from 2033 to 2026, meaning projects must begin construction by end of 2025 to qualify. This aligns with House-passed language and represents a drastic curtailment of the 10-year hydrogen credit horizon established in the IRA.

Advanced Manufacturing Production Credit (45X): The Senate plan softens the House’s outright repeal but still rolls back key portions of this supply-chain incentive. Section 70514 eliminates 45X credits for wind turbine components after 2027, matching the House cutoff. Credits for solar and battery components are terminated one year earlier than under IRA (sunsetting Jan 1, 2032 instead of 2033).

Critical mineral production, which IRA had made permanently eligible, would now phase out: 75% credit in 2031, 50% in 2032, 25% in 2033, and 0% after 2033. On the positive side, the Senate retains transferability of 45X credits (the House would have ended transfers after 2027). It also repeals an obscure provision for “integrated components” sales to prevent structuring around the new limits. In short, domestic manufacturers of solar panels, batteries, and critical minerals get a somewhat longer runway than under the House bill, but the credit’s long term support is notably scaled back.

New “Foreign Entity of Concern” Rules (FEOC) and Wind/Solar Excise Tax

Both the House and Senate versions introduce stringent Foreign Entity of Concern (FEOC) restrictions across clean energy tax credits, but the Senate draft provides more clarity. It defines objective tests for “Specified Foreign Entities” and “Foreign-Influenced Entities” – essentially targeting companies with significant Chinese, Russian, Iranian, or North Korean control or ownership. Credits will be denied if a project or manufacturer has “material assistance” from such entities. The Senate text spells out material assistance cost ratios that function much like domestic content rules: projects must source an increasing percentage of components from non-FEOC sources over time. For example, starting in 2026 a solar or wind project must have at least 40% non-FEOC content, rising to 60% after 2029, to claim full credits. Different thresholds apply by category – the Senate lays out detailed ratio schedules for solar panels, wind components, inverters, batteries, and critical minerals.

Crucially, the Senate approach replaces the House’s vague ban with a graded system, but if a project fails the FEOC test, the result is loss of credit. Industry experts note this effectively acts as a steep new tax on projects reliant on foreign supply chains.

The FEOC rules come with heavy compliance and enforcement measures. The Senate draft extends the IRS audit window from 3 to 6 years for credit claims involving FEOC content.

It also imposes penalties: if a taxpayer overstates their non-FEOC ratio (e.g. claims more domestic content than reality), they could face a 20% tax understatement penalty with a much lower threshold for trigger. Suppliers who provide false certification of component sourcing may themselves be penalized up to 10% of the credit amount.

The wind and solar sectors are singled out with additional pain: beyond credit denial, the bill includes a recapture clause requiring any project that received an ITC (48E) to forfeit the full credit if it makes a significant investment or payment to a prohibited foreign entity within 10 years.

Bottom line: the legislation is not final and may undergo further tweaks in coming days. Climate tech founders should stay closely tuned. There is mounting advocacy from industry – from startup CEOs to trade groups – aimed at softening the blow. There remains an opportunity to influence the outcome. Whether the climate related provisions are moderated or not, the political trajectory suggests any bill that emerges will still markedly scale back IRA’s climate investments. Even if Republicans succeed in pushing it through Congress, it would deliver on President Trump’s campaign promise to dismantle Biden’s climate law – a reality that could upend many clean energy business models. Founders should scenario-plan for the possibility that some IRA incentives expire years earlier than expected or come with new strings attached. At the same time, continue engaging policymakers: as this “One Big Beautiful Bill” winds through the Senate and reconciliation process, there is still a narrow window for the clean energy community to advocate for more workable timelines and provisions. In short, prepare for big policy changes, but also recognize that the fight isn’t over just yet.

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