Barring an overnight amendment, Senate Republicans are poised to place a surprise new tax on wind and solar power — a move that business groups, energy experts and many GOP senators fear will jeopardize American energy security and raise electricity prices across much of the country.
On Friday night, the Senate released its final draft of the reconciliation bill, and it included a surprise: further rollback of clean energy tax credits and a new tax on virtually all new solar and wind projects (based on a certain threshold of materials from China, which most projects well exceed).
The excise tax measure, which took some senators and industry leaders completely by surprise, imposes a tax on any solar and wind developers that source a certain percentage of materials for their projects from “prohibited foreign entities.” Before this weekend, a tax like this had never been publicly discussed or proposed during reconciliation negotiations.
On Monday, at least six Republican senators came out in support of undoing those plans. Alaska Sen. Lisa Murkowski and Iowa Sens. Joni Ernst and Chuck Grassley sponsored an amendment together, while Utah Sen. John Curtis introduced his own amendment and South Dakota Sen. Mike Rounds and North Carolina Sen. Thom Tillis indicated they supported changes. Iowa, Utah, South Dakota and North Carolina are all states with major clean energy investments dependent on the tax credits.
Despite the fact that six Republicans are vocally opposing the changes made over the weekend, on Monday it was not clear whether the amendment would succeed or if any of those senators would be willing to kill the final reconciliation bill over the changes.
Beyond Congress, the opposition backing up these senators has been widespread, bipartisan and vocal, ranging from the Chamber of Commerce, Elon Musk, venture capitalists, trade unions and conservative energy groups. Even the conservative champion of more severe cuts to clean energy subsidies, Alex Epstein, said that he did not support the proposed solar and wind tax.
“An excise tax unnecessarily punishes the industry and will harm consumers and business and could kill otherwise viable projects,” said Nick Loris, a policy leader at conservative climate advocacy group C3 Solutions.
The excise tax poses three significant problems, according to an expert at conservative innovation advocacy group Clearpath. It will likely spike the price of existing solar and wind projects in the pipeline (which make up most of the new planned energy projects across the U.S.), freeze future investment in clean energy projects needed for the buildout of artificial intelligence infrastructure and open a door for Democrats to justify proposed taxes on fossil energy sources in the future.
A preliminary Rhodium Group analysis found that the new tax would lead to an increase of costs between 10% and 20%, depending on the energy source. Clearview Energy Partners described the weekend’s changes as having the “potential to both discourage deployment and increase the cost of buildout that does occur.”
“I have a real interest in seeing that resolved,” Rounds said when asked by reporters whether he supports Ernst’s, Murkowski’s and Grassley’s amendment, while suggesting that there are still problems being worked out.
“There’s a whole lot of business out there that does not have the power they need if we don’t have power in place, and we don’t have right now the ability to get the power without taking on and pushing some of the renewables that are already in progress or are very closely in progress,” Rounds said.
“If we don’t have some of those, it’s going to set back some of the plans for energy production that we need for [artificial intelligence],” Rounds said separately to NOTUS of the tax credits.
In a floor speech Sunday night, Tillis criticized the tax credit restrictions as “arbitrary” and said they were part of the reason why over the weekend he voted against moving the bill forward in a procedural vote.
He also railed against the excise tax and suggested that President Donald Trump and White House officials were influential in including it.
“It’s another classic example where think tanks and people that haven’t worked a day in business are setting policy in the White House without a clue about what they’re potentially doing to our grid,” Tillis said.
Before the surprise tax proposal, moderate Republicans had been pushing to loosen the Senate’s proposed restrictions on clean energy tax credits. The new proposal moved the goalposts; clean energy groups lessened their focus on the possibility of surging electricity prices and increased concerns that the excise tax could possibly hamstring American energy production.
The potential for utility prices to surge across the nation became secondary to getting the excise tax out. Rounds — whose home state of South Dakota could see an average price increase of 8% in household utility costs by 2035 under the tax bill changes to the clean energy tax credits, according to an analysis from research group Energy Innovation — told NOTUS that higher prices aren’t his biggest concern. He was more worried about “the development of the energy” and gridlock that could inhibit technology development, he said.
Amid all the talk about the excise tax, its origins remain unknown, and multiple Democratic senators told NOTUS its inclusion in the bill came as a total surprise.
“It’s somebody that has a carbon soul,” said Sen. John Hickenlooper of Colorado. He pledged to “snoop around” to see if he could find out more.
“It appeared out of the dark,” said Sen. Sheldon Whitehouse of Rhode Island. “I assume it’s some scoundrel in the fossil fuel industry trying to hurt the competition, and there are any number of Republicans who’ve taken enough from the fossil fuel industry to do their bidding.”
But involvement from at least one influential group could offer some clues about the ideological wings of the party backing the provision.
The Coalition for a Prosperous America, an advocacy group that backs domestic manufacturing and jobs and sat on the Project 2025 advisory board, issued a statement supporting the excise tax soon after the Senate released its bill text. Two days before the text came out, the group also released a statement pointing out that the Senate’s proposed restrictions on clean energy developers’ relationships with foreign entities of concern would only last until 2026, and called for stricter restrictions. On Monday, the group also called on senators to vote against all three amendments that would strip or modify the provision.
The Coalition for a Prosperous America did not immediately respond to a request for comment about whether it was involved in the excise tax’s inclusion in the bill.
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Anna Kramer is a reporter at NOTUS. Shifra Dayak is a NOTUS reporter and an Allbritton Journalism Institute fellow.