Repealing Clean Energy Tax Credits Will Raise Prices for Ratepayers

Utility Dive:

• Repealing technology-neutral clean energy tax credits would raise the cost of energy for consumers and industry across 19 states from 2026 to 2032 by increasing reliance on natural gas generation sources that have constrained availability, according to a new study released Thursday by the Clean Energy Buyers Association.
• Republicans in Congress have targeted the tax credits for early phase-out as they seek to fulfill President Donald Trump’s campaign promises to extend certain tax cuts and repeal clean energy incentives the president has derided as a “scam.”
• The study found that energy-intensive sectors such as iron and steel, chemicals, cement, aluminum and nonferrous metals would be hardest hit.

The study, which NERA Economic Consulting conducted for CEBA, modeled the state-level electricity market outlooks assuming incremental electricity demand from the growth of data centers under two scenarios, with and without the federal investment and production tax incentives. It also provided a breakdown of projected cost increases in certain states. 

Seven of the 19 states would see double-digit percentage increases in average household and business electricity prices in the 2026-2032 period, according to the study. Maine would see the highest average increases, projected at 20% for households and 19.3% for businesses.

The increased costs would reduce economic growth, the study states.

“As commercial and industrial activity declines, demand for labor and capital falls, leading to wage losses, declining household income, and shrinking investment,” it states. “The scale and severity of these impacts vary by state but are significant and far-reaching.”

Utilities have also voiced concerns. The Edison Electric Institute, which represents investor-owned utilities, has come out in favor of keeping the incentives, saying they support Trump’s stated goals of keeping energy prices as low as possible and strengthening U.S. competitiveness, national security and energy dominance. 

Rob Meyer in the New York Times:

Take the new class of nuclear start-ups that are finally ready to deploy their first power plants. Or the entrepreneurs who have figured out how to use fracking equipment to deliver cheap, zero-carbon electricity by drilling new geothermal wells. Fervo Energy, one of these geothermal start-ups, has shown that its drilling times are falling, suggesting that its technology can rapidly take off in the same way that fracking, solar and batteries have. There’s even been recent encouraging news on the nuclear fusion front.

These and other clean-energy developments are the reason there’s the potential for a boom in U.S. electricity. For the first time in decades, American electricity demand is soaring, driven by electric vehicles, data centers and manufacturing.

Without a burst of new supply on the market, this demand will drive up power prices. Low electricity costs have long been a strength of American economic competitiveness that we are now at risk of losing.

Like with any new technology, these next-generation American nuclear and geothermal power plants will be hard to plan and hard to finance. That’s why the government should give them a leg up — much like it once helped the solar, wind and fracking industries — with tax incentives that support early projects. But the G.O.P. reconciliation bill would will make this impossible.

If the Senate follows the House and cuts off the clean-electricity tax credits, it will hurt these next-generation technologies most. Nuclear and geothermal developers in the first stages of building cannot rush their early projects to completion. Even if the Senate adopts the House’s provision to allow nuclear plants to use the tax credits until 2028, it will still not be enough — the procedural hurdles will prevent banks from financing nuclear plants. The Senate should give nuclear and geothermal developers the same long-term certainty it once extended to solar and wind developers.

Second, Republican senators should pay particular attention to the risk of a coming electricity and energy price shock. Today, natural gas provides about a third of America’s primary energy, and it is the country’s No. 1 source of electricity generation. But the country’s gas supply is about to come under more pressure. From 2024 to 2028, 10 new liquified natural gas terminals are expected to open across North America, which would roughly double the United States’ export capacity of the fuel. This would, in turn, increase demand for domestic natural gas supplies.

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In March 2025, a group of 21 House Republicans wrote to Speaker Mike Johnson, expressing their support for preserving clean energy tax credits established by the Inflation Reduction Act (IRA).
Letter excerpted here.

Countless American companies are utilizing sector-wide energy tax credits – many of which have enjoyed broad support in Congress – to make major investments in domestic energy production and infrastructure for traditional and renewable energy sources alike. Both our constituencies and the energy industry alike remain concerned about disruptive changes to our nation’s energy tax structure. Many credits were enacted over the course of a ten-year period, which allowed energy developers to plan with these tax incentives in mind. These timelines have been relied upon when it comes to capital allocation, planning, and project commitments, all of which would be jeopardized by premature credit phase outs or additional restrictive mechanisms such as limiting transferability. As energy demand continues to skyrocket, any modifications that inhibit our ability to deploy new energy production risk sparking an energy crisis in our country, resulting in drastically higher power bills for American families. This is especially true for energy credits with direct passthrough benefit to ratepayers, where such repeals would increase utility bills the very next day. As our conference works to make energy prices more affordable, tax reforms that would raise energy costs for hard working Americans would be contrary to this goal. Further, affordable and abundant energy will be critical as the President works to onshore domestic manufacturing, supply chains, and good paying jobs, particularly in Republican run states due to their business-friendly environments. Pro-energy growth policies will directly support these objectives.