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Investors in clean energy are paying close attention to provisions in the GOP’s agenda-setting spending bill – the so called “One, Big, Beautiful Bill” – as House Republicans narrowly pulled the legislation through that chamber this morning.

To help pay for the legislation – a comprehensive package including tax cuts and ramped up border spending – Republican lawmakers are turning to Biden-era clean energy tax credits rolled out under the 2022 Inflation Reduction Act. Latest iterations of the proposed legislation show a suite of credits designed not only to incentivize construction of new clean energy sources but also consumer purchases of EVs, residential solar, and home energy efficiency are all on the chopping block.

Those tax credits have spurred significant investment in clean energy. Quarterly investment in clean manufacturing has tripled since Q3 2022, up to $14bn from only $2.5bn, and companies have announced 380 clean technology manufacturing facilities since the legislation came into force.

Rolling back those incentives would be a major roadblock for the industry just as a tough combination of high interest rates, inflation, supply chain kinks and tariffs have all complicated the financing and construction of clean energy projects. Plus, the federal government recently rolled out antidumping and countervailing duties against several major solar importers of up to 652%.

Even the possibility of the credits’ rollback – combined with overall market uncertainty– has been enough to stall investment in the industry. During the first quarter of 2025 alone, there’s been roughly $7.9bn in cancelled, closed, or downsized projects, per a report by E2, a figure 3 times higher than that of investments cancelled over the 30 months prior. And companies announced $9.4bn in new manufacturing projects, down 23% from the same quarter last year, per a report by researchers at MIT and the Rhodium Group.

Proposed cuts under the House-passed bill include:

• Clean Energy Investment and Production Tax Credits would begin phasing out in 2029 and be eliminated by 2031
• All EV purchase tax credits ending by 2026. Credits end in 2025 for used vehicles and for new vehicles from manufacturers that have made or sold more than 200,000 vehicles.
• Home Energy Efficiency Credits ending by 2025
• New Energy Efficient Home Credits ended for any home acquired after 2025, or after 2026 for homes whose construction began before 12 May 2025
• Residential solar credits

Lawmakers are also aiming to implement more strict qualification restrictions on the investment and production credits, with last-hour amendments requiring projects to “commence construction” within 60 days of the bill’s enactment and be placed in service by 2028 to qualify for the credits, likely excluding a number of projects already in the pipeline.

New Foreign Entity of Concern (FEOC) restrictions targeting China, Russia, North Korea, and Iran will also pose problematic for developers, especially for solar and energy storage projects, given how much of the renewable value chain comes out of China.

97% of LFP cathode material, a crucial component of lithium batteries, comes from China, for example, according to energy research firm Wood Mackenzie, whose analysts say the FEOC restrictions effectively kneecap tax credits for storage projects.

“Even if those provisions are softened in the coming negotiations with the Senate, storage developers will face hard in-service deadlines in an industry prone to delays, higher costs, and increased risk for lenders,“ said Wood Mackenzie’s head of energy storage Allison Weis.

Growing Distress

Many projects are already falling behind and financing is becoming increasingly more complicated to obtain, analysts 9fin spoke with say.

"What we've seen happen is projects are taking longer to complete, cost overruns have become fairly common — because of when the projects are planned versus when they're when they're actually being built out," said Chris Lewand, who leads FTI Consulting’s Power, Renewables, and Energy Transition practice.

Take, for example, Li-Cycle. The Canadian company halted construction on its Rochester, New York-based lithium battery recycling hub in 2023 due to cost overruns for which it would need additional financing. Although it obtained a $475m up-sized Loan Facility from the Department of Energy, it failed to secure enough outside money for a base equity contribution to its Rochester hub necessary to draw on the DOE facility.

The company filed for bankruptcy in Canada in early May 2025 and is now seeking Chapter 15 recognition in the US, linking its funding woes to political uncertainty and investor concerns about the availability of its DOE loan, according to its filings. The company’s secured lender Glencore put in a mininum $40 credit bid as a stalking horse bidder.

Moelis and Alvarez & Marsel are advising the company.

Concerns over the availability of DOE loans are not new, and the Trump Administration’s energy secretary Chris Wright has indicated that the department does not intend to move forward with certain funding awarded under the previous administration as it audits billions in grants and loans.

A $1.66bn federal loan to Plug Power, a hydrogen fuel company on 9fin’s distressed pitch list, is among those under audit, although the company has maintained that the loan is still guaranteed.

“With the change in administration, we are actively working with the DOE to advance the loan process. The underlying program is contracted, obligated, and we believe secure, and we continue to engage closely with the administration,” said CEO Andy Marsh in the company’s Q1 earnings call. The company also raised a $525m secured credit facility with Yorkville Advisors.

Meanwhile, T1 Energy (formerly FREYR Battery)’s January 2025 cancelation of a $2.6bn battery factory in Georgia — not long after Kore Power backed away from its $1.2bn Arizona battery plant — reflects the difficulties mounting in the battery manufacturing landscape. The company is attempting to re-establish its presence in solar and recently undertook a strategic acquisition Trina Solar’s solar module manufacturing facility with plans to integrate with its own to-be-built solar cell production facility in Austin, TX. In a November 2024 investor presentation, the company cited IRA tax credits as giving the solar pivot “strong policy support” and said it expects both the module and cell facilities to be eligible for the credits.

If the GOP’s megabill passes in current form, the company would have to commence construction on that production facility within 60 days for it to be tax-credit eligible.

“Given our commercial partnership with Trina, the stringent foreign entity of concern language passed by the Ways and Means Committee has our attention,” said CEO Daniel Barcelo in the company’s latest earnings call. “But we have been neither surprised nor unprepared to consider modifying elements of our business plan, if necessary, to ensure compliance and preserve access to IRA incentives that are enabling T1 to build an integrated U.S. supply chain and to advance our domestic content strategy.”

T1 Energy did not respond to a request for comment.

And a pivot to solar energy would in no way provide insulation from these woes. High interest rates have for several years made the business of packaging residential solar financing into securitized debt less attractive. Rollback of investment, production, and residential solar tax credits would be even worse.

80% of US imported solar modules come from countries now targeted with up to 652% antidumping and countervailing duties, according to FTI. China’s share of the manufacturing stages of solar panels exceeds 80%, as 9fin highlighted in its report on tariff impacts, meaning new FEOC restrictions would likely apply to a large number of projects.

First Solar and SunRun are among high yield energy companies whose stock has declined as cuts to IRA incentives have become more likely. SunRun — on 9fin’s distressed pitch list — is facing mounting debt and has a large maturity wall in 2027. Its shares plunged as the bill cleared the house, down to $6.47 from $10.40 at closing on 21 May.

Even IG-rated companies like NextEra saw shares slide as the bill came out of the House. Fitch recently wrote in a note affirming its credit rating that it believes it would have at least some insulation from a repeal of IRA incentives, and has “strong relationships” with tax equity investors if in need of alternative funding.

Without federal incentives, companies will indeed need to pursue other forms of financing if they wish to push forward with projects even as investors are becoming more reticent.

“It's oftentimes going to require more equity because debt will not want to take on incremental risk, and it becomes more expensive to build out projects relatively because you can’t leverage it as much, which has an impact on returns” said FTI’s Chris Lewand.

But despite headwinds, some clean energy subsectors have enough momentum to potentially dampen the impacts of political backlash.

Tariffs and EV incentive rollbacks, for example, also clouded bankrupt EV maker Nikola’s Chapter 11 proceedings as prospective buyers reportedly citing this uncertainty as a sticking point in discussions with the company, but in the end Lucid agreed to acquire the company’s Arizona-based production facility and some other assets, showing some investment appetite in the sector and pockets of value in companies that can manufacture domestically.

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