Big Beautiful Bill: How Solar Credit Cuts Raise Power Bills

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act into law. Among its many provisions, it cuts short the federal clean electricity tax credits that have financed most new solar and wind projects in the U.S.

For households and businesses, the concern is simple. Fewer new power projects combined with rising demand usually means higher electricity bills, and one widely cited analysis projects increases in every state.

Here is what the bill changes, how large the price impact could be, and what it means if you already own a commercial solar system.

What Does the Big Beautiful Bill Change for Solar Tax Credits?

The One Big Beautiful Bill ends the Section 45Y and 48E tax credits for new solar and wind projects that don't begin construction by July 4, 2026, unless they are placed in service by December 31, 2027. Before the bill, those credits were scheduled to run well into the 2030s.

The main changes for solar:

• ●Section 45Y Production Tax Credit. Terminated for solar and wind projects that miss both the construction-start and placed-in-service deadlines.
• ●Section 48E Investment Tax Credit. Same cutoff as 45Y for solar and wind.
• ●Section 25D Residential Clean Energy Credit. Terminated for residential systems installed after December 31, 2025.
• ●Foreign entity of concern rules. Projects claiming credits must meet strict limits on components with "material assistance" from prohibited foreign entities. Experts quoted by Canary Media said similar restrictions in the Senate version were so hard to comply with they amounted to a backdoor repeal.

Other technologies got a longer runway. Energy storage, for example, keeps the full credit for projects that begin construction before 2034, then phases down.

Why Would Cutting Clean Energy Credits Raise Electricity Bills?

Solar, wind, and batteries made up over 90% of the new electricity capacity connected to the U.S. grid in 2024, so slowing them down slows the grid's main source of new supply. Tax credits are a large part of how those projects pencil out financially.

Analyzing an earlier version of the bill, Rhodium Group estimated the U.S. could see 57% to 72% less new clean capacity come online through 2035 than it would with the credits in place. That is a lot of supply to take out of the pipeline.

At the same time, demand is climbing. AI data centers are a major driver of rising electricity prices, which puts more pressure on the supply that does get built.

New gas plants can't close that gap quickly. Developers ordering gas turbines face wait times of up to five to seven years. Rising demand plus slower construction is a straightforward recipe for higher bills.

The incentives may be going away, but the demand for power isn't.

How Much Could Electricity Prices Rise by State?

NERA Economic Consulting, in an analysis commissioned by the Clean Energy Buyers Association, projected that repealing the clean energy tax credits would raise electricity prices in every state, by nearly 30% by 2029 in the hardest-hit states.

The key projections:

• ●Hardest-hit states. Wyoming, Illinois, and New Mexico would see the largest jumps in energy costs.
• ●Households nationwide. Electricity prices would rise by an average of 7.3%.
• ●Businesses nationwide. Electricity prices would rise by an average of 10.6%.
• ●Timeline. The steepest state-level increases land by 2029.

One caveat matters here. NERA modeled a repeal of the credits in early 2025, before the final text passed. The enacted law phases the credits out on a deadline rather than ending them all at once, so real-world results will depend on how much new capacity still gets built in time.

Why Are Businesses Projected to Pay More Than Households?

In NERA's projections, commercial customers take the bigger hit: 10.6% on average versus 7.3% for households. For a business with a large, steady electric load, that difference compounds month after month.

That matters for commercial property owners, manufacturers, and anyone running a facility with thin operating margins. Electricity is one of the few costs that rises whether or not the business grows.

It also changes the math on solar that is already on the roof. Every kilowatt-hour a system produces offsets grid power that is projected to get more expensive.

What Happens to New Solar Development After the Deadline?

Solar and wind projects that began construction before July 4, 2026 can still claim the credits even if they come online in 2028, 2029, or 2030. That safe-harbored pipeline is why installations can keep looking strong in the near term.

As we covered in how solar's record growth runs on credits Washington is now ending, today's capacity additions largely reflect projects approved under earlier incentives. Once that pipeline is built out, new projects will have to pencil without federal credits.

For the grid, that likely means fewer new projects competing to meet rising demand. For owners of existing systems, it means the power you already generate becomes harder and more expensive to replace.

What Does This Mean If You Already Own a Commercial Solar System?

The phase-out targets new projects based on when they start construction and come online, so a system that is already built and running keeps producing power regardless of the new deadlines. The question for existing owners is whether that system is actually performing.

A few things to check:

• ●Output. Is production tracking what the system should generate? Many systems are quietly underperforming and costing money every month without anyone noticing.
• ●Equipment age. Inverters typically wear out long before panels do, and an aging inverter can take the whole system offline.
• ●Ownership and contracts. Who collects the revenue, and who is responsible for repairs?
• ●Your plan. Keep it running, repower it, or sell it to an owner who will.

With retail rates projected to rise, a working system is worth more than it was. A system sitting offline is leaving more money on the table than it used to.

Start With a Ballpark Estimate

If you own a commercial solar system and aren't sure whether it is still earning its keep, start with numbers. Find out what your existing solar project may be worth before deciding whether to repair, repower, or sell.

The credits for new projects are winding down, but demand for power isn't. That makes the systems already in the ground more valuable, as long as they are producing.

Source: Canary Media, "Big, Beautiful Bill" would cause energy bills to go up in every state, with enacted-law details from SEIA and McGuireWoods.