Republican senators seek to change Senate bill clean energy tax, improve tax credits

By Valerie Volcovici

WASHINGTON, June 30 (Reuters) - Republican Senator Joni Ernst has introduced an amendment to the U.S. Senate's tax and spending megabill that would change two of the most contentious parts of that bill and could give a small boost to wind and solar projects that had been targeted in the draft being debated on the Senate floor.

The amendment introduced by Ernst, and supported by fellow Iowa Senator Chuck Grassley and Alaska Senator Lisa Murkowski, would remove the proposed new tax on wind and solar projects that start after 2027 and make the credits available based on projects' construction start date instead of when they enter service.

The amendment will be introduced on the Senate floor during Monday's "vote-a-rama" - a marathon of votes on amendments to President Donald Trump's tax and spending bill that drew searing criticism from business and labor groups since they were unveiled over the weekend, with some arguing the moves could lead to power shortages, raise power prices and kill jobs.

Ernst and Grassley represent Iowa, which receives more than 60% of its electricity from wind power. Other Republican senators may also back the amendment.

The pushback to the Senate bill, which includes a swipe from Trump ally and Tesla TSLA.O CEO Elon Musk, comes as senators started voting on a potentially long list of amendments to the bill on Monday morning, giving renewable energy advocates on both sides of the political spectrum a last window to push for changes.

"Taxing energy production is never good policy, whether oil & gas or, in this case, renewables," said Neil Bradley, policy director of the U.S. Chamber of Commerce, in a post on X over the weekend. "Electricity demand is set to see enormous growth & this tax will increase prices. It should be removed."

"This would be incredibly destructive to America!" Musk posted on X, saying the cuts could endanger the development of energy-hungry artificial intelligence technology, among other things.

Trump has said he intends to maximize U.S. energy production, with a focus on fossil fuels, in part to ensure the power industry can supply the AI industry's growth. But he has also promised to wipe out subsidies for renewables.

The Senate bill would roll back incentives for wind, solar, batteries and other clean energy technologies created by President Joe Biden's 2022 Inflation Reduction Act, and add a new tax on these projects if they cannot prove their products are made without Chinese parts.

Those provisions were harsher on the credits than the previous Senate version and even the House version.

Energy analysis firm the Rhodium Group estimates that the excise tax on wind and solar would increase their cost by 10-20% on top of losing the tax credits. Those additional costs would be passed on to consumers, Rhodium said.

South Korean solar energy company Qcells, which has invested $2.5 billion in U.S. solar manufacturing, said it supports a change in the bill to give access to credits based on construction start dates rather than "placed-in'serve" dates but wants to retain the creation of an excise tax to benefit U.S. manufacturing.

“Manufacturers have invested billions of dollars to build the solar supply chain in America. The Senate must protect those investments and the tens of thousands of jobs we as an industry have created. If they don’t, we forfeit our industry back to China,” said Marta Stoepker, spokesperson for Qcells.

Energy Secretary Chris Wright on Monday morning seemed to brush off warnings about the loss of generation capacity amid soaring demand.

"The more we load our grid with intermittent generation, the worse the grid performs during times of maximum demand," he posted on the social media platform. "The One Big Beautiful Bill will help end wasteful subsidies and deliver more reliable energy for the American people!"

In Texas, however, grid operator ERCOT said at its Board of Directors meeting last week that the state of the grid is strong and "ready for the challenges of extreme weather” this summer because of the new generation that has come online, and cited new large-scale solar energy and battery storage.

JOB LOSSES, HIGHER BILLS

Sean McGarvey, president of the North America’s Building Trades Unions, blasted the bill's impact on jobs.

"If enacted, this stands to be the biggest job-killing bill in the history of this country. Simply put, it is the equivalent of terminating more than 1,000 Keystone XL pipeline projects," he said in a statement, referring to an oil pipeline project blocked by Biden’s administration.

Republican Senator Thom Tillis of North Carolina, one of two Republicans who voted against advancing the bill, warned that it will cause power shortages by hamstringing renewable energy and battery storage.

Tillis drew ire from Trump for voting against the motion and has since said he does not plan to run for re-election.

"What you have done is create a blip in power service, because there isn't going to be a gas-fired generator anytime soon," he said on the floor.

Tillis said the bill ignores the reality of the soaring demand for power by data centers.

Brian Schatz, a Democratic Senator from Hawaii, said the bill would increase prices.

"You don't have to love clean energy or be an environmentalist to understand that this is a basic question of supply and demand," he said.