The Trump administration’s funding freeze for programs related to the Inflation Reduction Act has led to a number of clean energy projects hitting the pause button, as the industry waits to understand the full scope of planned changes to existing programs, clean energy company CEOs said in a recent press call.
President Donald Trump paused funding disbursements related to the IRA and parts of the Infrastructure and Jobs Act in an inauguration day executive order titled “Terminated the Green New Deal.” The order — and uncertainty around what changes could be in store for the laws’ programs as part of Congressional Republicans’ planned reconciliation bill — has pushed renewable energy projects around the country to pump the brakes, executives said on the Feb. 26 call coordinated by 501(c)4 Clean Energy for America. The nationwide network advocates for boosting the clean energy economy and accelerating the energy transition.
A number of industry stakeholders, including speakers present on the call, went to Capitol Hill last month to lobby Congress members directly to maintain the renewable energy tax credits in the IRA. Trade group the Solar Energy Industries Association and other groups held over 100 meetings with representatives.
Until the industry gets more certainty on the policy environment it will operate in, “everything’s kind of put on the back burner,” according to renewable energy developer and operator NXTGEN Clean Energy Solutions CEO Russ Bates.
Bates said he attended meetings with several House and Senate Republican leaders during the trip, and — though members expressed understanding — the primary pushback he received was that Congress will have to find ways to fund an extension of the 2017 Tax Cuts and Jobs Act in the reconciliation process.
“There are so many projects in various stages of development, and a lot of them have hit the pause button because they want to know what [policies are] going to pencil out?” Bates said on the call. “Are the tax incentives going to be around, or are they not? Because that really is going to play into if a project moves forward or not.”
At least two billion-dollar U.S. battery plant projects have been canceled since the inauguration, with Kore Power abandoning a plan to build a $1.2 billion facility in Arizona and Freyr Battery dropping a plan to build a $2.6 billion factory in Georgia in the past month. Freyr altered its plans and bought a solar panel plant in Texas instead, according to reports.
Though the Environmental Protection Agency announced this week it had unfrozen funds related to the Inflation Reduction Act’s $7 billion Solar for All program, uncertainty about the program created hesitancy among solar developers and prompted a lawsuit from Pennsylvania Gov. Josh Shapiro. Additionally, recipients of the IRA’s $20 billion Greenhouse Gas Reduction Fund have said the freeze of its awarded funds endanger their operations and argue the action is illegal.
Litigating the pauses may take time in court, but the uncertainty it’s created for clean energy project developers is “creating turmoil” in the meantime, according to Steph Speirs, co-founder and former CEO of community solar developer Solstice.
“Anytime there's uncertainty in the financial model of these projects, that slows down building the projects that can scare investors away from investing because the return on their capital is uncertain,” Speirs said on the call.
“If you pull the public money, you'll see less private money come in, because the public money is more risk taking and allows for the private money to be mobilized for these projects,” Speirs added.
Bates said private investors like banks and investors are “backing away a little” while there is so much uncertainty around what the tax credit environment will look like for clean energy projects. Speirs said while “private money is going to flow no matter what,” fewer projects will be built without the additional support from federal programs.
Jon Powers, CEO of Clean Capital — a renewable energy financier, developer and operator — said on the call that the industry has “grown significantly” since the first time Trump was in office and is prepared to help the nation meet the rising energy demands related to artificial intelligence and its data center needs. However, he said growth has been predicated on policy certainty, which is currently in flux.
“If you want to risk your projects, it's going to be more expensive for the consumers,” Powers said. “If you could have policy certainty and get things like infrastructure investors involved, then the reality is you have better projects that are built with less expensive capital, meaning better prices for consumers in the end.”
