The U.S. House Ways and Means Committee has introduced a bill that could dramatically reshape the country’s clean energy landscape. The legislation proposes a phased rollback of the 45E Clean Electricity Production Credit and the 48Y Clean Electricity Investment Credit, both of which were central to the Inflation Reduction Act of 2022.
This policy reversal arrives at a critical time for grid decarbonization and utility investment planning—and introduces deep uncertainty for stakeholders across the energy ecosystem.
Let’s review the details.
Table of Contents
- Proposed Rollback of Clean Energy Tax Credits
- Impact on Grid Capacity and Renewable Deployment
- Electric Vehicle Incentives in Jeopardy
- Uncertainty for Utilities, Governments, and Industry
- The Global Competitive Landscape
- What Happens Next?
- Final Thoughts
1. Proposed Rollback of Clean Energy Tax Credits
Under the bill, both 45E and 48Y would begin a step-down phase in 2029, reducing in value to:
- 80% in 2029
- 60% in 2030
- 40% in 2031
By 2032, these clean energy tax credits would be eliminated entirely.
This poses a significant disruption for utilities, developers, and municipalities relying on these incentives to support investments in battery energy storage systems (BESS), solar PV, and other low-carbon technologies.
2. Impact on Grid Capacity and Renewable Deployment
According to projections by the Rhodium Group, the 45E and 48Y credits were expected to contribute 146 to 308 gigawatts (GW) of clean energy capacity to the U.S. grid by 2030.
Without them, utilities may face delayed timelines for integrated resource planning, slower adoption of distributed energy resources (DERs), and increased dependence on legacy fossil fuel assets to meet peak demand.
3. Electric Vehicle Incentives in Jeopardy
The proposed legislation also seeks to end the $7,500 federal tax credit for electric vehicles (EVs). Per the New York Times article, this change would reduce consumer demand, placing pressure on EV manufacturers, battery producers, and mineral supply chains.
As of 2024, 24 EV manufacturing plants have been set up in the U.S. specifically to meet the eligibility requirements tied to this credit.
Eliminating the incentive could trigger production slowdowns and job losses, and undermine efforts to electrify the transportation sector.
4. Uncertainty for Utilities, Governments, and Industry
The abrupt nature of the proposed policy shift is creating turbulence for companies and local governments attempting to make long-term, capital-intensive investments in clean energy.
“It’s difficult for a company to invest somewhere and then conditions change. So our take is that some consistency is helpful for companies as they make large investments.”
— Bert Brantley, CEO, Savannah Area Chamber of Commerce
The rollback creates new risks for demand-side load management planning and energy efficiency programs that rely on predictable federal support.
5. The Global Competitive Landscape
The bill’s timing is especially notable given China’s accelerating investment in low-carbon technologies. According to Bloomberg, China’s total investment in renewable energy in 2024 exceeded that of the U.S., European Union, and United Kingdom combined.
If the U.S. reverses course on tax incentives, it could lose valuable ground in the global clean tech arms race—particularly in solar, battery production, and EV infrastructure.
6. What Happens Next?
The proposal will now be debated in Congress, with potential revisions and opposition expected. For now, utilities and energy leaders should prepare for multiple scenarios—including a future where federal tax incentives play a smaller role in clean energy deployment.
The outcome of this legislation will influence:
- Clean energy investment decisions
- Ratepayer program design
- Long-term grid modernization strategies
We’ll be tracking the bill’s progress and its implications for utility partners and policymakers.
7. Summary
For utilities, municipalities, and clean energy developers, stable federal support has been a cornerstone of grid innovation and decarbonization efforts. The proposed phaseout of 45E, 48Y, and EV credits sends a strong signal: adaptability and strategic foresight are more critical than ever.
Contact Mysa’s Utilities Team to explore how smart thermostat strategies can support your evolving demand-side goals.