U.S. Clean Energy Sector Faces 20% Project Reduction Due to New Law

The passage of the "Big and Beautiful Act" by the U.S. Congress has sparked significant concerns within the American power industry. The law, which is set to take effect upon the signature of the U.S. President, includes provisions that could significantly impact the clean energy sector. Specifically, the act stipulates that all clean energy projects not commenced by the end of 2027 will lose their tax incentives, while those that begin construction by June 2026 will still be eligible for these benefits. This change is particularly concerning for the clean energy industry, as tax incentives are crucial for controlling project costs. The loss of this financial support could lead to a severe crisis within the sector.

The President of the U.S. Solar Energy Industries Association warned that the act could result in increased electricity prices, the closure of manufacturing plants, and the loss of thousands of construction jobs. This, in turn, could weaken the power grid and undermine the U.S.'s global competitiveness. The act's potential to disrupt the nation's energy future and hinder the development of industries critical to economic growth and national security is a significant concern. This disruption could also affect the U.S.'s position in the global technological race.

The act's impact on the clean energy sector is expected to be profound. Many projects may rush to complete construction by 2027, but this could lead to a 20% reduction in clean energy projects over the next decade. Given that renewable energy sources accounted for nearly 90% of the new electricity capacity added in the U.S. last year, this reduction could have far-reaching consequences. The overall new installed capacity in the U.S. could decrease by approximately 20%, leading to higher electricity costs.

The growing demand for data centers, driven by the artificial intelligence boom, is placing increasing strain on the U.S. power grid. This trend requires continuous expansion of the grid's capacity to support technological advancements. The International Energy Agency predicts that while U.S. electricity demand has remained relatively stable over the past few decades, it is expected to surge by 25% between 2023 and 2035, and by approximately 60% between 2023 and 2050. This increased demand, coupled with the potential reduction in clean energy projects, poses a significant challenge.

The Chief Executive of NextEra Energy, a major utility and power developer, noted that even natural gas power generation may not be sufficient to meet the growing demand from data centers. Despite record-breaking domestic shale gas production, the cost of converting natural gas into electricity is rising, and supply chain challenges are limiting production. This situation underscores the need for the U.S. to invest in new power generation facilities, considering all available technologies, including nuclear, natural gas, wind, and solar power.