New Bill Ends Solar, Wind Credits, But Extends Other Incentives to 2036

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A new proposal circulating in the US Senate could significantly alter the financial outlook for renewable energy. The draft legislation proposes a full phase-out of federal tax credits for solar and wind energy by 2028, potentially reshaping investment strategies and slowing clean energy development.

Under the Inflation Reduction Act, solar and wind projects are eligible for tax credits through 2032. The Senate’s draft, however, would reduce support to 60 percent in 2026, 20 percent in 2027, and eliminate it entirely by 2028.

Inside the proposed rollback of solar and wind credits

The proposed phase-out, backed by several Republican lawmakers, suggests a reassessment of how long renewable sectors should depend on federal support. Advocates for the bill argue that solar and wind industries are now sufficiently mature and no longer need extended subsidies.

Critics contend that the proposal overlooks regional disparities in energy adoption and investment readiness. Without stable, long-term incentives, they argue, growth in emerging markets may stall, and project financing could become less feasible.

Market impact and investor reaction across the sector

The market responded quickly. Shares of major solar companies tumbled in the wake of the announcement: Sunrun dropped 40 percent, SolarEdge 35 percent, First Solar 24 percent, and Enphase 22 percent.

This selloff reflects concerns about regulatory stability and how it affects long-term investment decisions. Federal incentives have been central to clean energy project economics. Their potential loss adds uncertainty that could limit capital inflows and delay project timelines.

Lenders and institutional investors are also rethinking renewable strategies. Some may reduce exposure to solar and wind, redirecting funds to sectors with stronger policy backing.

A different path for hydropower, nuclear, and geothermal

While solar and wind face rollbacks, the bill proposes extending tax credits for hydropower, nuclear, and geothermal energy through 2036.

This move signals a policy shift favoring energy sources with consistent generation capacity. Hydropower and nuclear plants offer base-load reliability, while geothermal provides a steady alternative to intermittent sources like solar and wind.

The extension may also reflect growing interest in a diversified energy mix, particularly in states seeking to modernize their grids while ensuring reliability.

The proposal has drawn criticism from clean energy advocates who warn it could derail progress toward emission targets. Industry groups say sudden shifts in policy create unnecessary volatility, undermining investor confidence.

Whether the bill advances remains to be seen. However, its release has already prompted a strategic reassessment among developers and policymakers alike. The proposal highlights the continued influence of legislative direction in the renewable energy sector.

Sources:

• Reuters