Last week, a joint resolution seeking to repeal the 45Y clean electricity production credit and 48E clean electricity investment credit — together known as the technology-neutral electricity tax credits — was introduced in the U.S. Senate.
The effort is being heavily criticized by clean energy industry representatives, who coalesced in Washington, D.C. last week in a lobbyist push to maintain the incentives, pointing out that a repeal is likely to increase the cost of electricity and “derail President Trump’s vision for bolstering America’s energy dominance.”
According to a new analysis by the think tank Energy Innovation, a repeal of the 45Y and 48E tax credits is estimated to increase energy bills in the U.S. by around $6 billion annually by 2030, and $25 billion annually by 2040. The meta-analysis pooled together the findings of research groups including Aurora Energy, the Rhodium Group, and the Brattle Group.
On average, this means that energy bills for the average household would increase by between $40 to $60 per year by 2030, and to between $140 and $220 per year by 2040.
This is the culmination of months of speculation about which tax credits are most at risk under the Trump administration, ever since House Speaker Mike Johnson said that he’d prefer to take a “scalpel and not a sledgehammer” to the Biden administration’s landmark law. Despite Trump administration pressure, a growing number of House Republicans have opposed the repeal of the clean energy tax credits; a group of 21 signed a letter in favor of maintaining certain credits earlier last month.
The tech-neutral tax credits are among the most impactful and popular of the IRA’s tax credits — but that isn’t necessarily enough to save them. The new credit structure covers solar and wind, in addition to hydropower, nuclear, geothermal, and more emerging technologies like marine and hydrokinetic energy. Additionally, stand-alone storage is now eligible for the investment tax credit. They were finalized in the Biden administration’s final weeks.
However, they’re also expensive, which is one of the reasons that they could be at risk. The tech-neutral investment tax credit (48E) has a higher utilization than the production tax credit (45Y), which prompted Power Brief CEO and founder Jason Clark to speculate that the ITC is more vulnerable than the PTC.
The state-by-state break-down
While energy costs would go up nationwide, these increases aren’t distributed equally across by state. Many of the states that would be affected by especially steep estimated increases are Republican states; for instance, Missouri could see an annual energy bill increase of over $600 by 2040; meanwhile, Arkansas of over $500, and Texas of over $400.
The increase in household bills would come at a bad time. Nationwide, U.S. electricity prices have risen by nearly 20% since the beginning of 2021, due to a combination of factors including natural gas price volatility and rising transmission and distribution costs.
When the IRA was first signed into law, researchers estimated that it would lower household electricity bills by 4.5% by 2030 and by up to 8.6% after 2030. Similarly, research by the National Renewable Energy Lab and Resources for the Future found that the IRA, and technology-neutral electricity tax credits specifically, could lower bills by approximately 4% to 6% in 2030.
Meanwhile, research included in the report by NERA Economic Consulting found that if the federal tax credits had never been introduced, U.S. residential electricity prices would likely be 6.7% and 7.3% higher in 2026 and 2029 respectively than what’s currently projected.
