You’re out of free articles.
Log in
To continue reading, log in to your account.
Create a Free Account
To unlock more free articles, please create a free account.
Sign In or Create an Account.
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Welcome to Heatmap
Thank you for registering with Heatmap. Climate change is one of the greatest challenges of our lives, a force reshaping our economy, our politics, and our culture. We hope to be your trusted, friendly, and insightful guide to that transformation. Please enjoy your free articles. You can check your profile here .
subscribe to get Unlimited access
Offer for a Heatmap News Unlimited Access subscription; please note that your subscription will renew automatically unless you cancel prior to renewal. Cancellation takes effect at the end of your current billing period. We will let you know in advance of any price changes. Taxes may apply. Offer terms are subject to change.
Subscribe to get unlimited Access
Hey, you are out of free articles but you are only a few clicks away from full access. Subscribe below and take advantage of our introductory offer.
subscribe to get Unlimited access
Offer for a Heatmap News Unlimited Access subscription; please note that your subscription will renew automatically unless you cancel prior to renewal. Cancellation takes effect at the end of your current billing period. We will let you know in advance of any price changes. Taxes may apply. Offer terms are subject to change.
Create Your Account
Please Enter Your Password
Forgot your password?
Please enter the email address you use for your account so we can send you a link to reset your password:
Plus a note on batteries.
Rooftop solar is not like other types of consumer technology. Even though the end result is having a bunch of electrical equipment installed on the roof of your home, the process of getting solar is more like doing a bathroom renovation than buying a flat screen TV. To get the results you’re looking for, the most important decisions you’ll make are not the brand or model of the panels, but rather who you hire for the job, the size of your system, and how you finance it.
There’s a bunch more choices you’ll have to navigate along the way, and it’s easy to get overwhelmed. One expert I spoke with told me that sometimes the customers who are the most excited about getting solar end up bailing, the victims of decision fatigue.
We created this guide to save you from that fate. So take a deep breath, take my hand, and let’s walk down the metaphorical hardware store aisle and get you the rooftop solar solution you’re dreaming of.
Roger Horowitz is the director of Go Solar programs at Solar United Neighbors, a national nonprofit that serves as an unbiased resource for homeowners interested in solar. Horowitz manages and provides technical support to the company’s Solar Help Desk team.
Tony Vernetti is a senior trainer at Enphase Energy, a company that produces inverters, batteries, and EV chargers, where he trains solar sales and installation teams. Before joining Enphase in 2020, Vernetti spent 12 years working for rooftop solar companies in California.
Nate Bowieis the vice president of residential sales at ReVision Energy, an employee-owned solar company operating throughout northern New England. Bowie has been selling solar for ReVision for 15 years.
While the actual installation of the system should only take one to two days, the entire process from initial outreach to grid connection takes two to four months on average, according to Solar United Neighbors.
Example: The highest rated solar panels for 2024 according to EnergySage.com are SunPower's M-Series 440 watt model. If you install 20 of these, the system will be capable of generating 8,800 watts, or 8.8 kilowatts in direct sun.
When you start searching for information about solar on the internet, you might come across advertisements or commercials promoting free solar panels. There is no such thing. These ads are typically schemes to collect your personal data and sell it to solar companies looking for leads, and the federal government is starting to
crack down on them.
It is possible to install solar with zero up-front costs if you lease the system or take out a loan to finance it, but in both cases you will still owe monthly payments. It is also rare that anyone is able to offset 100% of their utility bill. You can get close, but you will likely still owe at least a connection fee to your utility company.
Most homeowners in the U.S. can benefit from installing solar as long as local energy policies are favorable. Placing the panels on a south-facing roof is optimal, but not necessary. If your panels face due west, you’ll only lose about 10% of potential generation, according to Vernetti. “They still produce a ton of energy. They’re still very effective. It's just a little bit less than if they're facing south,” he said. An east-facing roof is also viable in most cases.
You don’t have to worry about shoveling snow off the roof or anything like that. But like any other electronic devices, solar panels, inverters, and batteries can break or malfunction, and your system may require servicing at some point. Pay close attention to your warranties (more on that later). If you lease the system, you do not have to worry about this as much because the third-party owner will be responsible for maintenance.
In order to design a system that meets your needs and budget, solar companies will ask for a copy of your most recent electricity bill or, ideally, your annual energy consumption history. Make sure you have this information handy before you reach out for quotes.
Some utilities include your annual energy consumption, broken out by month, at the bottom of your electric bill. If you don’t see it, you should be able to log into your utility account online and download either your statements from the past year or a spreadsheet of your monthly electric meter readings.
In most of the U.S., you will find you have the option either to lease your solar panels or buy them outright. You don’t have to decide which way you want to go before you get started, but it’s helpful to think through the pros and cons of each.
Heatmap Recommends leasing if: You’re fairly certain you’ll keep your house for the next 15 to 20 years; you can’t afford the system outright, but you don’t want to take out a loan; your priority is to generate clean energy and reduce emissions, but you don’t want to spend too much time figuring out what you want or worrying about the system’s maintenance.
Heatmap Recommends buying if: You have the cash in hand; you might sell your house in the next 20 years; you know you want to have control over the details of your project.
The federal government offers a 30% tax credit for solar installations (and batteries) that covers parts and labor. It can significantly reduce the cost of getting solar, even if you don’t have a lot of tax liability in the year that you install the system. The credit will roll over to subsequent tax years.
Example: If you spend $25,000 installing solar in 2024, you’ll be eligible to take $7,500 off your federal income tax bill. If you only owe $3,000 in federal taxes in 2024, you’ll get $3,000 back and will be eligible to claim the remaining $4,500 for the 2025 tax year. If in 2025 you only owe $3,000 again, you can claim the remaining $1,500 in 2026.
Additional tax credits and rebates may also be offered by your state energy office, city, or utility. Contractors should be able to help you figure out what you’re eligible for, and you can wait to talk to them to learn more. However, incentives change frequently, and contractors don’t always keep up, so you might want to review the options in your area independently.
It will also be helpful to understand your state’s net metering policy, as that will determine how quickly your investment in solar will pay off and may also dictate how big your system can be. Some states, like New Jersey, also allow homeowners to generate additional income through the sale of solar renewable energy credits, or SRECS.
Where to look for more information:
One of the worst things that could happen is you install rooftop solar panels, and then later find out you have a leak or some other problem with your roof. “Removal and replacement of an array for a reroof is expensive and could significantly impact the owner’s return on investment,” Bowie told me. While metal roofs last a very long time and are unlikely to need a replacement, asphalt shingle roofs generally have a useful life of 25 to 30 years, Bowie said. You should be fine if your roof is less than 10 years old, but if not, you may need some roofing work done before your solar panels are installed.
If you don’t know how old your roof is, Vernetti recommended having a roofing contractor inspect it. He added that there’s varying opinions on this, with some solar experts recommending replacement if the roof is only 5 years old. “In my opinion, scrapping a 5 year old roof is wasteful and goes against the goal of sustainability,” he said.
“A good solar contractor will help evaluate the roof conditions and should recommend replacement when necessary, even if it is just to replace the roof on the roof plane where the solar panels will go,” said Bowie.
Solar contractors range from local mom and pop shops, to regional providers like ReVision Energy, which operates in multiple states in the Northeast, to national companies that install across the country like Sunrun and Sunnova.
“The advantage of going with a large company is that they have the ability to offer financing the smaller companies might not be able to. With a regional company, you can actually walk to their office and knock on the door and talk to somebody if you want to,” said Vernetti.
Heatmap Recommends: Contact at least one local company and one national company to get a good sense of your options. Always get at least three quotes!
If you are calling installers directly, here are some tips for what you should ask for or look for in a quote. (If you are using an online resource like EnergySage that finds quotes for you, use the following to help you ask follow-up questions or refine the proposals.)
A few questions you should ask:
One of the first questions an installer might ask you is how big you want the system to be. You may want to see quotes for multiple options in order to compare them. Options include:
Heatmap Recommends: Oversize your system if you can afford it.
Why?
Exceptions:
Most installers will include a financing option in their quote. Horowitz noted that some installers advertise very low interest rates that are below market rate. They are typically able to do this by paying a “dealer fee” to the bank, which they incorporate into the price of your installation — in other words, if your interest rate seems too good to be true, the total cost of your installation will likely be higher than it otherwise would be. To get a better sense of the true cost, ask for quotes both with and without financing options.
Adding energy storage, a.k.a. a battery, to your solar array can add another 10 grand or more to the project cost. But there are a few reasons it might be worth it:
In conclusion, if you just want back-up power, any battery that’s large enough to power your essential systems should do. If you want to pay off the investment, look into time-of-use rates. If you want your investment to go further for decarbonization, ask your contractor if there are local grid services programs available, and if any of their products are compatible.
After you get a few quotes, you’re going to want to spend some time comparing them, asking questions, and potentially soliciting additional quotes with variations on the system. If you’re feeling overwhelmed or you don’t have the time or patience to sort through the details on your own, you can also call the Solar United Neighbors Help Desk, which offers a free quote review service.
The most important number on the quote is the price per watt, not the total system cost. That is the number you should be comparing between different installers, as the quotes may be for differently sized systems.
You should also compare the annual bill savings. If two different companies quote you significantly different savings for systems that are roughly the same size, one of them has likely done a more detailed analysis of your roof than the other.
“It doesn't matter what module you have, from which manufacturer, or what inverter you have. There really is no difference in what your system can produce if it's the same size,” said Bowie.
Lastly, if the quote is for a solar lease, or includes a financing option, look at the monthly payments.
Every installer has certain brands and types of equipment they work with. Our expert panel agreed that it’s important to look at the brand names the installer is offering for the solar panels, inverters, and batteries, and to make sure they are from reputable companies that have been around for at least five years — even if it means paying more. A quick internet search of the top 10 residential solar panel brands should give you a taste of what those companies are.
“It is definitely worth paying a little bit extra to have really good equipment,” Vernetti said.
You may also see installers advertise that they offer “Tier 1” solar panels. That means the manufacturer has been designated “bankable” by Bloomberg New Energy Finance. The designation is more related to finance than product quality, but many solar companies use it as a rough proxy for reliability.
That being said, don’t get too bogged down in comparing solar brands.
“There's not a huge difference, typically, between one solar panel and the next of the Tier 1 manufacturers,” said Bowie. “A lot of solar companies will maybe offer one or two different manufacturers, and then maybe beyond that one or two different sizes.”
When it comes to inverters, you do want to pay attention to whether your quote includes string inverters, microinverters, or power optimizers. In a system with a string inverter, your panels will all be wired to one central inverter. This is generally the cheapest option, but it is less durable and may need to be replaced, said Vernetti, whose employer, Enphase, is the leading producer of microinverters. String inverters can also limit the output of your system if part of the roof gets more shade.
The other two options are more expensive but get around the issue with shade. A system with power optimizers is similar to one with a string inverter, but each panel will also have a small device attached to it that regulates the output and maximizes your system’s performance. By contrast, microinverters are small inverters attached to each individual panel. Both of these options also allow you to monitor each panel’s performance.
Bowie said the two were comparable in terms of performance and price. A key consideration, he said, is that your choice of inverter can begin to lock you into using the same brand of equipment on other home upgrades you might do down the line. “If you're an EnPhase customer, you're likely going to be going down the track of an EnPhase battery storage system,” he said. “Whether the customers know it or not, they're kind of being pushed down a path towards this manufacturer for more things in their home, like batteries, whole home controls, electric vehicle charging."
Your quote should provide information about warranties offered by the manufacturers of the panels, inverters, and batteries, as well as by the installation company. 25-year warranties are standard, but the details vary by installation company and by manufacturer. For example, your inverters may have a 25-year warranty, meaning you can get replacement inverters for free if any of them fails within that time period — but if you don’t have a warranty on labor, it could cost you several hundred dollars to get them installed.
“It's really important for customers to read the fine print and to talk with their local solar company who is quoting the system for them to uncover what the warranties mean,” said Bowie.
This is especially important if you are installing batteries. Ask your installer about both the equipment warranty and their policy is for servicing the equipment.
Most solar installers offer financing options. Your quote should include the name of the lender the installer works with, the down payment, monthly payment, financing term, and interest rate. However, you may find a better deal elsewhere. Horowitz noted that installers like using their own financing companies because it speeds up the sales process — they can approve you for a loan just by putting in your social security number, and sell it to you at the same time as the contract. But you may find a better deal elsewhere.
“Talk to your bank, talk to your credit union, look at home equity lines of credit, see what other options you have out there, and if those have lower interest rates or better payment terms,” said Horowitz. “You are not required to use their finance.”
After you’ve found an installer, settled on a system design, and secured financing, all that’s left to do is sign your contract. Then, you wait. Your installer will have to obtain permits from your city, county, or state, as well as an interconnection agreement with your utility.
One way to try to minimize the wait time is by working with an installer with lots of local experience. They’ll be better equipped to navigate the permitting process. For example, if you want Tesla solar panels but Tesla hasn’t done many installations in your community, it may take longer for the company to get through this stage.
After these two steps are complete, the solar company will reach out to you to schedule the installation, which should only take a few days.
After the system is installed, you may have to wait for a final inspection from your utility or a verified third party for permission to operate the system.
Log in
To continue reading, log in to your account.
Create a Free Account
To unlock more free articles, please create a free account.
Empire Wind has been spared — but it may be one of the last of its kind in the U.S.
It’s been a week of whiplash for offshore wind.
On Monday, President Trump lifted his stop work order on Empire Wind, an 810-megawatt wind farm under construction south of Long Island that will deliver renewable power into New York’s grid. But by Thursday morning, Republicans in the House of Representatives had passed a budget bill that would scrap the subsidies that make projects like this possible.
The economics of building offshore wind in the U.S., at least during this nascent stage, are “entirely dependent” on tax credits, Marguerite Wells, the executive director of Alliance for Clean Energy New York, told me.
That being said, if the bill gets through the Senate and becomes law, Empire Wind may still be safe. The legislation would significantly narrow the window for projects to qualify for tax credits, requiring them to start construction by the end of this year and be operational by the end of 2028. Equinor, the company behind Empire Wind, maintains that it aims to reach commercial operations as soon as 2027. The four other offshore wind projects that are under construction in the U.S. — Sunrise Wind, also serving New York; Vineyard Wind, serving Massachusetts; Revolution Wind, serving Rhode Island and Connecticut; and Dominion Energy’s project in Virginia — are also expected to be completed before the cutoff.
Together, the five wind farms are expected to generate enough power for roughly 2.5 million homes and avoid more than 9 million tons of carbon emissions each year — similar to shutting down 23 natural gas-fired power plants.
Still, this would represent just a small fraction of the carbon-free energy eastern states are counting on offshore wind to provide. New York, for example, has a statutory goal of getting at least 9 gigawatts of power from the industry. Once Empire and Sunrise are completed, it will have just 1.7 gigawatts.
If the proposed changes to the tax credits are enacted, these five projects may be the last built in the U.S.
That’s not the case for solar farms or onshore wind, Oliver Metcalfe, head of wind research at BloombergNEF told me. They can still compete with fossil fuel generation — especially in the windiest and sunniest areas — without tax credits. That’s especially true in today’s environment of rising demand for power, since these projects have the additional benefit of being quick to build. The downside of losing the tax credits is, of course, that the power will cost marginally more than it otherwise would have.
For offshore wind farms to pencil out, however, states would have to pay a much higher price for the energy they produce. The tax credits knock off about a quarter of the price, Metcalfe said; without them, buyers will be back on the hook. “It’s likely that some either wouldn’t be willing to do that, or would dramatically decrease their ambition around the technology given the potential impacts it could have on ratepayers.”
Part of the reason offshore wind is so expensive is that the industry is still new in the U.S. We lack the supply chains, infrastructure, and experienced workforce built up over time in countries like China and the U.K. that have been able to bring costs down. That’s likely not going to change by the time these five projects are built, as they are all relying on European supply chains.
The Inflation Reduction Act spurred domestic manufacturers to begin developing supply chains to serve the next wave of projects, Wells told me. It gave renewable energy projects a 10-year runway to start construction to be eligible for the tax credits. “It was a long enough time window for companies to really invest, not just in the individual generation projects, but also manufacturing, supply chain, and labor chain,” she said.
Due to Trump’s attacks on the industry, the next wave of projects may not materialize, and those budding supply chains could go bust.
Trump put a freeze on offshore wind permitting and leasing on his first day in office, a move that 17 states are now challenging in court. A handful of projects are already fully permitted, but due to uncertainty around Trump’s tariffs — and now, around whether they’ll have access to the tax credits — they’re at a standstill.
“No one’s willing to back a new offshore wind project in today’s environment because there’s so much uncertainty around the future business case, the future subsidies, the future cost of equipment,” Metcalfe said.
The House budget bill may have kept the 45Q tax credit, but nixing transferability makes it decidedly less useful.
Very few of the Inflation Reduction Act’s tax credits made it through the House’s recently passed budget bill unscathed. One of the apparently lucky ones, however, was the 45Q credit for carbon capture projects. This provides up to $180 per metric ton for direct air capture and $85 for carbon captured from industrial or power facilities, depending on how the CO2 is subsequently sequestered or put to use in products such as low-carbon aviation fuels or building materials. The latest version of the bill doesn’t change that at all.
But while the preservation of 45Q is undoubtedly good news for the increasing number of projects in this space, carbon capture didn’t escape fully intact. One of the main ways the IRA supercharged tax credits was by making them transferable, turning them into an important financing tool for small or early-stage projects that might not make enough money to owe much — or even anything — in taxes. Being able to sell tax credits on the open market has often been the only way for smaller developers to take advantage of the credits. Now, the House bill will eliminate transferability for all projects that begin construction two years after the bill becomes law.
That’s going to make the economics of an already financially unsteady industry even more difficult. “Especially given the early stage of the direct air capture industry, transferability is really key,” Giana Amador, the executive director of an industry group called the Carbon Removal Alliance, told me. “Without transferability, most DAC companies won’t be able to fully capitalize upon 45Q — which, of course, threatens the viability of these projects.”
We’re not talking about just a few projects, either. We’re talking about the vast majority, Jessie Stolark, the executive director of another industry group, the Carbon Capture Coalition, told me. “The initial reaction is that this is really bad, and would actually cut off at the knees the utility of the 45Q tax credit,” Stolark said. Out of over 270 carbon capture projects announced as of today, Stolark estimates that fewer than 10 will be able to begin construction in the two years before transferability ends.
The alternative to easily transferable tax credits is a type of partnership between a project developer and a tax equity investor such as a bank. In this arrangement, investors give project developers cash in exchange for an equity stake in their project and their tax credit benefits. Deals like this are common in the renewable energy industry, but because they’re legally complicated and expensive, they’re not really viable for companies that aren’t bringing in a lot of revenue.
Because carbon capture is a much younger, and thus riskier technology than renewables, “tax equity markets typically require returns of 30% or greater from carbon capture and direct air capture project developers,” Stolark told me. That’s a much higher rate than tax equity partners typically require for wind or solar projects. “That out of the gate significantly diminishes the tax credit's value.” Taken together with inflation and high interest rates, all this means that “far fewer projects will proceed to construction,” Stolark said.
One DAC company I spoke with, Bay Area-based Noya, said that now that transferability is out, it has been exploring the possibility of forming tax equity partnerships. “We’ve definitely talked to banks that might be interested in getting involved in these kinds of things sooner than they would have otherwise gotten involved, due to the strategic nature of being partnered with companies that are growing fast,” Josh Santos, Noya’s CEO, told me.
It would certainly be a surprise to see banks — which are generally quite risk averse — lining up behind these kinds of new and unproven technologies, especially given that carbon capture doesn’t have much of a natural market. While CO2 can be used for some limited industrial purposes — beverage carbonation, sustainable fuels, low-carbon concrete — the only market for true carbon dioxide removal is the voluntary market, in which companies, governments, or individuals offset their own emissions by paying companies to remove carbon from the atmosphere. So if carbon capture is going to become a thriving, lucrative industry, it’s likely going to be heavily dependent on future government incentives, mandates, or purchasing commitments. And that doesn’t seem likely to happen in the U.S. anytime soon.
Noya, which is attempting to deploy its electrically-powered, modular direct air capture units beginning in 2027, is still planning on building domestically, though. As Santos told me, he’s eyeing California and Texas as promising sites for the company’s first projects. And while he said that the repeal of transferability will certainly “make things more complicated,” it is not enough of a setback for the company to look abroad.
“45Q is a big part of why we are focused on the U.S. mainly as our deployment site,” Santos explained. “We’ve looked at places like Iceland and the Middle East and Africa for potential deployment locations, and the tradeoff of losing 45Q in exchange for a cheaper something has to be significant enough for that to make sense,” he told me — something like more cost efficient electricity, permitting or installation costs. Preserving 45Q, he told me, means Noya’s long-term project economics are still “great for what we’re trying to build.”
But if companies can’t weather the short-term headwinds, they’ll never be able to reach the level of scale and profitability that would allow them to leverage the benefits of the 45Q credits directly. For many DAC companies such as Climeworks, which built the industry’s largest facility in Iceland, Amador and Stolark said that the domestic policy environment is causing hesitation around expanding in the U.S.
“We are very much at risk of losing our US leadership position in the industry,” Stolark told me. Meanwhile, she said that Canada, China, and the EU are developing policies that are making them increasingly attractive places to build.
As Amador put it, “I think no matter what these projects will be built, it’s just a question of whether the United States is the most favorable place for them to be deployed.”
House Republicans have bet that nothing bad will happen to America’s economic position or energy supply. The evidence suggests that’s a big risk.
When President Barack Obama signed the Budget Control Act in August of 2011, he did not do so happily. The bill averted the debt ceiling crisis that had threatened to derail his presidency, but it did so at a high cost: It forced Congress either to agree to big near-term deficit cuts, or to accept strict spending limits over the years to come.
It was, as Bloomberg commentator Conor Sen put it this week, the wrong bill for the wrong moment. It suppressed federal spending as America climbed out of the Great Recession, making the early 2010s economic recovery longer than it would have been otherwise. When Trump came into office, he ended the automatic spending limits — and helped to usher in the best labor market that America has seen since the 1990s.
On Thursday, the Republican majority in the House of Representatives passed their megabill — which is dubbed, for now, the “One Big, Beautiful Bill Act” — through the reconciliation process. They did so happily. But much like Obama’s sequestration, this bill is the wrong one for the wrong moment. It would add $3.3 trillion to the federal deficit over the next 10 years. The bill’s next stop is the Senate, where it could change significantly. But if this bill is enacted, it will jack up America’s energy and environmental risks — for relatively little benefit.
It has become somewhat passé for advocates to talk about climate change, as The New York Times observed this week. “We’re no longer talking about the environment,” Chad Farrell, the founder of Encore Renewable Energy, told the paper. “We’re talking dollars and cents.”
Maybe that’s because saying that something “is bad for the climate” only makes it a more appealing target for national Republicans at the moment, who are still reveling in the frisson of their post-Trump victory. But one day the environment will matter again to Americans — and this bill would, in fact, hurt the environment. It will mark a new chapter in American politics: Once, this country had a comprehensive climate law on the books. Then Trump and Republicans junked it.
The Republican megabill will make climate change worse. Within a year or two, the U.S. will be pumping out half a gigaton more carbon pollution per year than it would in a world where the IRA remains on the books, according to energy modelers at Princeton University. Within a decade, it will raise American carbon pollution by a gigaton each year. That is a significant increase. For comparison, the United States is responsible for about 5.2 gigatons of greenhouse gas pollution each year. No matter what happens, American emissions are likely to fall somewhat between now and 2035 — but, still, we are talking about adding at least an extra year’s worth of emissions over the next decade. (Full disclosure: I co-host a podcast, Shift Key, with Jesse Jenkins, the lead author of that Princeton study.)
What does America get for this increase in air pollution? After all, it’s possible to imagine situations where such a surge could bring economic benefits. In this case, though, we don’t get very much at all. Repealing the tax credits will slash $1 trillion from GDP over the next decade, according to the nonpartisan group Energy Innovation. Texas will be particularly hard hit — it could lose up to $100 billion in energy investment. Across the country, household energy costs will rise 2% to 7% by 2035, on top of any normal market-driven volatility, according to the energy research firm the Rhodium Group. The country will become more reliant on foreign oil imports, yet domestic oil production will budge up by less than 1%.
In other words, in exchange for more pollution, Americans will get less economic growth but higher energy costs. The country’s capital stock will be smaller than it would be otherwise, and Americans will work longer hours, according to the Tax Foundation.
But this numbers-driven approach actually understates the risk of repealing the IRA’s tax credits. The House megabill raises two big risks to the economy, as I see it — risks that are moresignificant than the result of any one energy or economic model.
The first is that this bill — its policy changes and its fiscal impact — will represent a double hit to the capacity of America’s energy system. The Inflation Reduction Act’s energy tax credits were designed to lower pollution and reduce energy costs by bringing more zero-carbon electricity supply onto the U.S. power grid. The law didn’t discriminate about what kind of energy it encouraged — it could be solar, geothermal, or nuclear — as long as it met certain emissions thresholds.
This turned out to be an accidentally well-timed intervention in the U.S. energy supply. The advent of artificial intelligence and a spurt of factory building has meant that, in the past few years, U.S. electricity demand has begun to rise for the first time since the 1990s. At the same time, the country’s ability to build new natural gas plants has come under increasing strain. The IRA’s energy tax credits have helped make this situation slightly less harrowing by providing more incentives to boost electricity supply.
Republicans are now trying to remove these tax bonuses in order to finance tax cuts for high-earning households. But removing the IRA alone won’t pay for the tax credits, so they will also have to borrow trillions of dollars. This is already straining bond markets, driving up interest rates for Americans. Indeed, a U.S. Treasury auction earlier this week saw weak demand for $16 billion in bonds, driving stocks and the dollar down while spiking treasury yields.
Higher interest rates will make it more expensive to build any kind of new power plant. At a moment of maximum stress on the grid, the U.S. is going to pull away tax bonuses for new electricity supply and make it more expensive to do any kind of investment in the power system. This will hit wind, solar, and batteries hard; because renewables don’t have to pay for fuel, their cost variability is largely driven by financing. But higher interest rates will also make it harder to build new natural gas plants. Trump’s trade barriers and tariff chaos will further drive up the cost of new energy investment.
Republicans aren’t totally oblivious to this hazard. The House Natural Resource Committee’s permitting reform proposal could reduce some costs of new energy development and encourage greater power capacity — assuming, that is, that the proposal survives the Senate’s byzantine reconciliation rules. But even then, significant risk exists for runaway energy cost chaos. Over the next three years, America’s liquified natural gas export capacity is set to more than double. Trump officials have assumed that America will simply be able to drill for more natural gas to offset a rise in exports, but what if higher interest rates and tariff charges forbid a rise in capacity? A power price shock is not off the table.
So that’s risk No. 1. The second risk is arguably of greater strategic import. As part of their megabill, House Republicans have stripped virtually every demand-side subsidy for electric vehicles from the bill, including a $7,500 tax credit for personal EV purchases. At the same time, Senate Republicans and the Trump administration have gutted state and federal rules meant to encourage electric vehicle sales.
Republicans have kept, for now, some of the supply-side subsidies for manufacturing EVs and batteries. But without the paired demand-side incentives, American EV sales will fall. (The Princeton energy team projects an up to 40% decline in EV sales nationwide.) This will reduce the economic rationale for much of the current buildout in electric vehicle manufacturing and capacity happening across the country — it could potentially put every new EV and battery factory meant to come online after this year out of the money.
This will weaken the country’s economic competitiveness. Batteries are a strategic energy technology, and they will undergird many of the most important general and military technologies of the next several decades. (If you can make an EV, you can make an autonomous drone.) The Trump administration has realized that the United States and its allies need a durable mineral supply chain that can at least parallel China’s. But they seem unwilling to help any of the industries that will actually usethose minerals.
Does this mean that Republicans will kill America’s electric vehicle industry? Not necessarily. But they will dent its growth, strength, and expansion. They will make it weaker and more vulnerable to external interference. And they will increase the risks that the United States simply gives up on ever understanding battery technology and doubles down on internal combustion vehicles — a technology that, like coal-powered naval ships, is destined to lose.
It is, in other words, risky. But that is par for the course for this bill. It is risky to make the power grid so exposed to natural gas price volatility. It is risky to jack up the federal deficit during peacetime for so little gain. It is risky to cede so much demand for U.S.-sourced critical minerals. It is risky to raise interest rates in an era of higher trade barriers, uncertain supply shocks, and geopolitical instability.
This is what worries me most about the Republican megabill: It takes America’s flawed but fixable energy policy and replaces it with, well, a longshot parlay bet that nothing particularly bad will happen anytime soon. Will the Senate take such a bet? Now we find out.
Editor’s note: This story has been updated to correct the units in the sixth paragraph from megatons to gigatons.