In line with President Trump’s policy, the US House of Representatives yesterday passed a budget bill that basically kills the Inflation Reduction Act (IRA)—a cornerstone of the Biden administration’s clean energy agenda and a key source of subsidies for renewable energy projects over the past few years.
While the original draft proposed a gradual phase-out of tax credits for projects placed in service between 2029 and 2032, the final bill significantly tightens eligibility. Under the new rules, projects must begin construction within 60 days of the bill’s enactment (i.e., by late 2025) and be placed in service by the end of 2028 to qualify for tax credits. This effectively shrinks the window for developers to secure credits to a narrow three-year period for both construction and operation.
Additionally, the bill excludes solar and wind projects operating under leasing models from tax credit eligibility and repeals the transferability of tax credits—a mechanism that previously allowed developers to sell credits to third parties, improving liquidity and financing flexibility.
These changes are particularly damaging for residential solar, which relies heavily on the leasing model, and for green hydrogen, which remains economically viable only with the help of subsidies. The removal of these incentives could severely disrupt investment and deployment in both sectors.
On a more positive note, the bill includes support for nuclear energy, extending tax credit eligibility for advanced nuclear projects and power uprates of existing reactors that begin construction by 2028. It also extends a separate production credit for existing nuclear plants through 2031 and preserves tax credit transferability for nuclear projects.
The bill now moves to the Senate, where revisions are expected. Even assuming a more moderate stance from Senators, the outlook remains uncertain—especially for residential solar and hydrogen. Several companies in these sectors have already filed for or are close to bankruptcy, and that trend could accelerate if the bill passes in its current form.
Our exposure to these segments remains close to zero, and we are in no rush to re-enter, particularly as the massive and immediate energy demands of data centers are currently being addressed by natural gas and nuclear projects, which have stronger political and financial backing.
Accordingly, we keep focusing our investments around gas turbines, nuclear plant construction and engineering and grid engineering, allowing our portfolio to show a robust +11% year-to-date performance, far above cleantech/solar/hydrogen/sustainability ETFs and funds.
