Senate Passes Tax Bill; Incremental Changes Positive for Renewable Energy Credits

On July 1, the US Senate passed its version of the tax bill, with language tweaked to be more favorable toward renewable energy credits than the draft released the previous weekend.

Why it matters: Key incremental positive changes include the elimination of a tax on projects using foreign content above certain limits, an extended sunset of wind and solar tax credits, and the ability for residential solar leasing to continue qualifying for credits through year-end 2027.

• The phaseout of wind and solar tax credits will now allow a four-year safe harbor for projects starting construction within a year of the bill’s passage, effectively allowing projects to be placed in service in 2030 and still qualify.
• Residential solar leasing was also an incremental winner, with credits continuing for projects placed in service by year-end 2027. This is positive for Sunrun’s leasing business model, as earlier versions of the bill would have seen these incentives end at year-end 2025.

The bottom line: We are maintaining our fair value estimates across our solar coverage as we await further tweaks to the bill before its final passage.

• We continue to view 3-star-rated First Solar and Brookfield as among the most insulated from potential policy changes within our broader renewables coverage.

Coming up: Further tweaks remain possible, as the Senate version of the bill must now be reconciled with the House’s version before being sent to President Donald Trump for signature into law.