Boost for Renewables Investors as Tax Legislation Opens Up Opportunities in US Green Energy Market

The US renewable-infrastructure industry is breathing slightly easier as a new version of President Donald Trump’s ‘One Big Beautiful Bill’ act gets Senate approval. This revision is notably more favorable to the sector than its original version. The major coup for industry players and investors alike is the removal of the proposed excise tax on solar and wind projects. Originally, the tax would have put levies on wind and solar projects sourcing from China - a global leader in wind and solar components production. Ben Holthus, an investment officer at Montgomery County Employees’ Retirement System, remarked, the removal of the excise tax is akin to extinguishing a potential dynamite on the proverbial fire in the renewables sector. The US is grappling with an energy gap as demand for electricity outpaces supply from both traditional and renewable sources. This scenario is translating into heftier energy prices. According to consultancy giant McKinsey, annual power demand in the US will likely spike by over 3% each year till 2040. In this backdrop, the green light from the Senate to the tax bill, which features energy tax credits more generous to the renewable industry than previously anticipated, sparked a rally among clean energy stocks on Tuesday. However, uncertainties and potential barriers persist for the renewable sector. The bill notably scales back on energy tax incentives launched during former President Joe Biden’s administration. An air of ambiguity lingers around trade policy and interest rates as looming obstacles to dealmaking. Meanwhile, international pension funds and sovereign wealth managers, once active investors in US renewable infrastructure, are adopting a wait-and-see approach. Prior to the passage of the new bill, many had put their US investments on hold. In contrast, fundraising activities flourished in Europe during the first quarter of 2025. About 80% of capital raised by infrastructure funds with energy transition strategies were committed to European markets according to PitchBook’s latest Global Real Assets Report. Looking ahead, surveillance of fund trends suggests revised tax legislations may result in more funds flowing back into the US market, giving the renewable sector a much-needed boost.