WASHINGTON — June 30, 2025 — A controversial Senate Republican bill could drastically reshape the future of clean energy in the U.S., with provisions imposing a 30% to 50% tax on solar and wind energy projects that begin operations after 2027 if they use any materials from "foreign prohibited entities."

The measure, embedded in a sweeping spending and tax package, could be voted on as early as July 2, and is drawing intense scrutiny during ongoing Senate amendment debates.

The proposed tax mirrors a trend from the House version of the bill, which seeks to eliminate federal tax credits and subsidies for renewable energy by 2027. However, the Senate draft goes further, introducing unexpected penalties for developers relying on global supply chains — a condition that could apply to most solar and wind projects.

Developers warn the compliance thresholds would be nearly impossible to meet, forcing most projects to pay the punitive tax. Industry analysts estimate this could increase project costs by 10%–20%, leading to a sharp reduction in investment at a time when electricity demand is surging, driven by data center expansion and AI-related energy usage.

“This provision could stall the U.S. energy transition for a decade,” said one industry source familiar with the draft bill.

Notably, the foreign materials clause was not included in the House version, nor was it present in earlier versions of the Senate bill. Its sudden addition has caught the clean energy industry off guard, triggering lobbying efforts and pleas for amendment.

With the U.S. grid under historic strain and renewable energy expected to play a central role in meeting future demand, the outcome of this legislation will be closely watched by utilities, investors, and climate policy advocates.

As of June 30, the Senate is still debating amendments, with multiple proposals to soften or remove the clean energy tax provisions under discussion.