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The U.S. renewable energy industry is bracing for a financial hit that could exceed $7 billion if a newly proposed tax provision within former President Donald Trump’s sweeping domestic spending bill is passed, according to warnings from the American Clean Power Association.

The legislation, championed by Senate Republicans, includes significant rollbacks of clean energy tax credits and a new tax targeting renewable projects that use components sourced from "foreign entities of concern," a term largely understood to refer to China. These changes, if enacted, would go into effect for wind and solar projects that begin service after 2027.

Key Tax Provisions Threaten Industry Economics

At the core of the proposal is a new tax on wind and solar installations using parts exceeding certain thresholds of Chinese origin. According to John Hensley, Senior VP at the American Clean Power Association, the tax would impose an additional burden of between $4 billion and $7 billion on the industry.

In addition, the bill abruptly phases out the federal Investment Tax Credit (ITC) and the Production Tax Credit (PTC) for new clean energy projects, two mechanisms that have been instrumental in the massive expansion of renewable infrastructure across the U.S. since 2005.

“This bill imposes a new tax in a package that supposedly reduces taxes — it’s contradictory and devastating for renewables,” Hensley told reporters.

Impact on Clean Energy Development and Grid Stability

Abigail Ross Hopper, CEO of the Solar Energy Industries Association, warned that the legislation would fundamentally alter the economics of future solar and wind projects. According to Hensley, the sudden rollback could wipe out 300 gigawatts of planned renewable capacity over the next decade — equal to an estimated $450 billion in lost infrastructure investment.

The implications for U.S. energy independence and climate goals are dire. Without these projects, electricity prices could rise, and the resilience of the national electric grid could be compromised, experts say.

Jobs at Risk: Industry and Labor Unions Sound the Alarm

The construction sector may also feel the ripple effects. The North America’s Building Trades Unions (NABTU) estimates that nearly 2 million jobs in construction and related trades could be at risk due to the bill’s clean energy rollbacks.

“This could be the single most job-killing bill in American history,” said NABTU President Sean McGarvey. “Terminating these credits is the equivalent of killing more than a thousand Keystone XL pipeline projects.”

Wall Street Reacts: Renewable Stocks Take a Hit

Investors were quick to respond. On news of the proposed legislation, NextEra Energy, the largest U.S. renewable energy developer, saw its shares dip 2%. Other solar companies also fell sharply:

• Array Technologies dropped 8%
• Enphase Energy slid 1.9%
• Nextracker declined 5%

Morgan Stanley analyst Andrew Percoco described the current direction of the bill as a "worst-case outcome" for solar and wind, adding that the market is pricing in long-term damage to the industry.

Musk and Other Leaders Slam the Bill

Prominent business figures, including Elon Musk, have spoken out against the proposal. In a weekend post on X (formerly Twitter), Musk condemned the bill’s provisions.

“The latest Senate draft bill will destroy millions of jobs in America and cause immense strategic harm to our country,” the Tesla CEO wrote. “Utterly insane and destructive. It gives handouts to industries of the past while severely damaging industries of the future.”

Musk’s criticism adds to a growing chorus from both the tech sector and clean energy advocates calling on lawmakers to reconsider the legislation’s impact.

Legislative Outlook

Senate Republicans are pushing to pass the bill by a self-imposed Friday deadline, with votes on amendments underway. If the Senate approves the bill, it will return to the House for a final vote before potentially landing on Trump’s desk for signature.

As the future of U.S. energy policy hangs in the balance, clean energy developers, construction unions, and investors alike are watching closely. The outcome of this legislative battle could reshape the trajectory of America’s transition to renewable power for years to come.