The draft budget reconciliation bill released by the US House Ways and Means Committee introduces several measures that could hinder the development of renewable energy projects across the country. Analysts at Wood Mackenzie have raised concerns over the early phaseout of key tax incentives, more restrictive eligibility criteria, and provisions targeting foreign ownership.

The bill outlines a phased reduction of the investment tax credit (ITC) and production tax credit (PTC) for wind, solar and energy storage projects. Under the proposal, projects placed in service by 2028 would retain full credit value. From 2029 onwards, credit levels would decline to 80%, then 60% in 2030, 40% in 2031, and be eliminated entirely by 2032.

The removal of transferability and the requirement for projects to be placed in service—rather than simply beginning construction—are expected to affect most clean energy projects. Stricter rules related to ‘foreign entities of concern’ (FEOC) may also limit project eligibility.

In the wind sector, the early termination of manufacturing tax credits could constrain an already limited supply chain. Analysts anticipate a short-term increase in wind installations as developers rush to qualify for remaining incentives, similar to trends seen between 2020 and 2022, when annual installations averaged 14 GW. However, the proposed shift in eligibility from “start of construction” to “placed in service” is likely to create further uncertainty and increase financial risk.

Wood Mackenzie estimates that nearly 11 GW of onshore wind capacity is expected to come online between 2025 and 2027. These projects may struggle to meet the new criteria for tax credit eligibility, potentially disrupting financing and investment planning.