Republican solar cuts raise your electric bill, threaten US energy/AI dominance

House republicans passed their tax bill, which promises to inflate costs for Americans and channel money from the middle class to billionaires, all while sending jobs to China.

But that’s not the only bad stuff that’s in the bill – it will also inflate your electricity costs and threaten a recent boom in solar installations that is helping to grow domestic energy production and feed power-hungry data centers for AI.

The tax bill eliminates popular solar credits that had helped American homeowners to save money on their electricity bills. The main credit in question is the 30% residential solar tax credit, often known as the Investment Tax Credit (ITC).

The credit for homeowners would be sunset at the end of this year, if the bill passes the Senate. The commercial credit would sunset more slowly, but faster than the current law.

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Not only does the ITC help homeowners to save thousands of dollars while cutting their electricity bill, it also helps overall electricity costs, even for those who don’t have home solar.

The republican bill will raise your electricity costs

The Clean Energy Buyers Association released a report earlier this year showing how repealing solar credit would raise the average American’s electricity bills by 7% by 2026, the equivalent of a $110 yearly increase. And for businesses, electricity bills will increase by about 10% – higher costs that will then be passed on to consumers in the form of higher prices for consumer goods.

The credits had been helping to fuel a boom in US energy installations. In the first months of this year, 98% of new US electrical generation capacity came from wind and solar, as a result of how relatively quick and easy it is to install wind and solar projects as compared to other generation methods.

It’s particularly important for the US to add more electrical generation capacity at the moment, because two electricity-hungry industries are rapidly scaling up: AI and electric cars.

The US needs more electricity, and fast

Electric cars actually save energy compared to gas cars, and are 4-6x more efficient per unit energy. However, since gas cars aren’t fueled by electricity, energy delivery will have to shift away from gasoline and towards electrical distribution.

So more electrical generation capacity needs to be added in order to unlock the potential energy efficiency gains (and thus cost savings) from fleet electrification.

AI isn’t quite so energy-saving. An AI search uses 30x more energy than a traditional search, and gives less accurate results.

Despite this, US tech companies and the government consider it important to develop AI rapidly, in order to be on the cutting edge of technology.

So, there has been a massive expansion of data centers in the US, and those data centers need electricity to run. It has contributed to global shortages of electricity and increased rates.

Many of these data centers are trying to find green sources of energy in order to offset their wasteful overuse of resources, or at least to greenwash it. So companies have been installing solar, wind, or investigating the possibility of small modular nuclear reactors, which are highly energetic and also zero-carbon, but much more expensive than renewables.

And solar, as mentioned above, is a rapidly deployable electricity generation method, and can often leverage already underutilized space (i.e. rooftops) to help confront today’s energy challenges.

The bill surrenders both points to China

On both of these points, EVs and AI, cutting solar installations will only help to cede ground to China.

By disincentivizing a generation method that can be deployed rapidly, it will make it more difficult to electrify the US fleet, which means US manufacturers will probably spend less focus on EVs (more on that here).

This is not happening in China, which is rapidly transforming its car industry to confront the transition to EVs, and recently became the world’s largest auto exporter due to intransigence from the rest of the world’s auto industry (and through the West handing wins to China with ill-considered policy).

Also, China is rapidly advancing its own AI tech, which it says is more efficient than ours (but that may not be true). Making electricity more expensive for companies, and making it harder for companies to install the generation capacity they need to fuel their data centers, will only serve to choke the industry compared to its international competitors.

Solar industry responds

The Solar Energy Industry of America responded, with similar points that we’ve brought up here.

“If Congress does not change course, this legislation will upend an economic boom in this country that has delivered an historic American manufacturing renaissance, lower electric bills, hundreds of thousands of good-paying jobs, and tens of billions of dollars of investments primarily to states that voted for President Trump.

“This unworkable legislation is willfully ignorant of the fact that deploying solar and storage is the only way the U.S. power grid can meet the demand of American consumers, businesses, and innovation. If this bill becomes law, America will effectively surrender the AI race to China and communities nationwide will face blackouts.

“But that’s not all: Americans’ electric bills will soar. Hundreds of factories will close. Hundreds of billions of dollars in local investments will vanish. Hundreds of thousands of people will lose their jobs. Families will lose the freedom to control their energy costs. And our electric grid will be destabilized.

“It’s not too late for Congress to get this right. The solar and storage industry is ready to get to work with the U.S. Senate on a more thoughtful and measured approach to unleashing true American energy dominance to create a brighter future for all Americans.”

-Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA)

This can change, if the Senate has a spine

From here, the tax bill goes on to the Senate, where it could be modified to take out these poison pills that inflate costs for Americans and threaten US competitiveness globally. The Senate is often though of as a more deliberative body which can tamp down on the excesses of the House, though it failed to do so in another republican anti-clean-air effort today.

If you have a republican Senator, it might be worth letting them know that you support lower electricity costs and keeping America competitive, and therefore that you oppose the anti-solar measures in this bill.

The argument could be made stronger in states that have received significant investment for battery plants, which are important for grid and home storage as backup for solar systems. Battery projects are particularly popular in states like Georgia, North Carolina, and others along the burgeoning US “battery belt”.

To make a comment,, you can find your Senator on Congress’ website, and then search for the contact form on your Senator’s website to get in contact with them.

Of course, if you have a Democratic Senator, it’s also worth letting them know that you oppose the tax bill, just in case a few of them decide to jump ranks and join the republicans in harming America. We certainly hope they don’t, and are encouraged by the fact that every Democrat in the House made the right decision here, but anything could happen.

If the rooftop solar credit is going away, it means you could have only until the end of this year to install rooftop solar on your home, before republicans raise the cost of doing so by an average of ~$10,000. So if you want to go solar, get started now, because these things take time and the system needs to be active before you file for the credit.

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