I have talked to > 50 legislators about the House’s termination of solar/wind subsidies. The vast majority are under the misimpression that it is much harsher on subsidized solar/wind projects than it actually is.
I sympathize; the language is tricky, and lobbyists lie about it to make legislators think the world is going to end if their subsidies aren’t extended.
Once I explain the truth, many draw the same conclusion I do—that the House BBB is, if anything, overly generous in subsidizing new solar/wind projects. And certainly that Senate Finance’s proposal is a crazy giveaway to grid-destroying grifters
Here’s the explanation I’ve shared with them.
The House “termination” of solar/wind subsidies was not a payment termination—which would mean: no more subsidy payments for any projects, completed or new, after a certain date. (I personally prefer this kind of termination, because it truly takes subsidies off the books instead of leaving their payment streams lingering, e.g., 10-year PTC payments for wind farms or 12-year payments for carbon capture. And it truly discourages businesses from subsidy-seeking behavior in the future.)
The House “termination” of solar/wind subsidies was an eligibility termination, meaning that projects that weren’t in “construction” by a certain date (60 days after enactment) and in “service” by a certain date (12/31/28) were ineligible for subsidies.
It is not well known (even by legislators) that “construction” is an extremely easy threshold to meet. It just requires investing 5% of a project’s expected cost, and these investments can be in tradable commodities such as solar panels.
The House framework generously protected subsidies for all existing and near-complete projects, which would already be in “construction” and would have 3.5 years to be “placed in service.”
For the purposes of stopping subsidies for new subsidized solar/wind projects, which are an existential threat to the grid, the House terms were overly permissive. Allowing 60 days after enactment to commence “construction”—which can be done near-instantaneously—and then 3.5 years to place in service would guarantee a deluge of new subsidized solar/wind projects. But at least that deluge would taper off as we reached 2026 and 2027, creating a vital “subsidy drought” that would cripple the subsidy lobby.
Here is what happens to different kinds of projects under the House bill.
- Existing projects: Fully subsidized.
- Near-complete projects: Fully subsidized.
- New 2025 projects with shorter completion cycles: Fully subsidized.
- New projects with longer completion cycles and/or projects that would be initiated after 2026: Not subsidized. Of those projects, projects that can compete on a free market will still come into being. Only projects that can’t compete on a free market will not come into being.
See how generous the House was to subsidized solar/wind?
Conclusions:
- If you want to protect subsidies for existing and near-complete projects, the House parameters are more than generous, and in fact will allow quite a few totally new subsidized solar/wind projects to come into being. And of course projects that don’t need subsidies will come into being. (Notice that the lobbyists tell us that solar/wind projects are super-cheap but also tell us that none will exist without lavish subsidies…)
- If you want to stop as many new subsidized solar/wind projects from being initiated as you can, the House language needs to be strengthened. You need to move “construction” to the day of enactment (no new subsidized projects initiated) and “placed in service” to 12/31/27. The latter still gives plenty of time for near-complete projects to finish and collect their subsidy, but it makes it even harder for new projects to be initiated. And, even more valuable, it ensures that subsidies expire with more than a year remaining of the Trump administration. Subsidies expiring at the end of 2028 makes them easier to resurrect.
- If you want to keep initiating new subsidized solar/wind projects, and make it likely that subsidies never end, then you should do exactly what the Senate is doing. You should refuse to allow any “placed in service” termination date, and instead support a phony “in construction” standard that’s easy to meet and gives subsidy-seekers 4 bonus years to be placed in service.
If the Senate wants to “extend the Green New Scam,” as they are currently working to do, they should announce this intention to the public and to the President.
If the Senate wants to “terminate the Green New Scam,” they should act on this intention and strengthen, not weaken, the House’s termination of subsidies.
What the Senate cannot do honestly is what it is on the verge of doing: say it wants to “terminate the Green New Scam” but then pass legislation that extends the Green New Scam.
