June 29, 2025 - On June 16, 2025, the US Senate Committee on Finance released its legislative text (the “Senate Finance Committee version”) for the tax provisions of the “One Big Beautiful Bill,” the budget reconciliation bill currently under consideration by Congress that was passed by the House of Representatives on May 22, 2025 (the “House version”). Our prior Legal Update, House Reconciliation Bill Amends Clean Energy Provisions of the IRA, provided a summary and analysis of the House version of the legislation that amended the clean energy provisions enacted as part of the Inflation Reduction Act of 2022. Here, we highlight some of the more significant changes to the clean energy provisions in the Senate Finance Committee version.

The Senate aims to consider this legislation the week of June 22, 2025. However, both chambers will need to reconcile the differences in proposed legislation and finalize the legislation to be sent to the President for approval. Congressional leaders’ stated goal is for the House and Senate to coordinate on any changes and thus create the opportunity for the House to pass the Senate Finance Committee version without further amendment, but that outcome remains uncertain at this time.

The key takeaways are:

• Production Tax Credit (“PTC”) and Investment Tax Credit (“ITC”): The Senate Finance Committee version generally retains the existing technology-neutral PTC and ITC under Section 45Y and 48E for technologies other than solar and wind (but imposes a hard sunset for projects placed in service after 2032, regardless of annual greenhouse gas emissions), and like the House version does not impact any projects that commenced construction prior to 2025 that are eligible for the PTC/ITC under Sections 45 and 48. With respect to solar and wind (but not energy storage technology ), there is a phased reduction of the technology-neutral ITC and PTC based on the beginning of the construction year starting in 2026 and ending in 2028. This means that to maximize the technology-neutral ITC and PTC for solar and wind projects, developers should consider entering into “beginning of construction” arrangements, such as transformer supply agreements or module supply agreements. The Senate Finance Committee version is more generous than the House version, which would eliminate the technology-neutral PTC and ITC for all technologies (not just solar and wind) that fail to begin construction within 60 days of the passing of the legislation or that fail to be placed in service by the end of 2028. The Senate Finance Committee version would also align the domestic content bonus percentage for Section 48E with current Section 45Y and begin to phase down projects that begin construction after June 16, 2025 (i.e., the date of the release of the Senate Finance Committee version).
• Advanced Manufacturing Credit: The Senate Finance Committee version phases down credits more gradually for solar energy equipment, battery components, and critical minerals. Significantly, the Senate Finance Committee version eliminates credit stacking, which generally means that a manufacturer will be precluded from using horizontal integration of manufacturing processes to maximize the credit.
• Transferability: There are no limitations on transferability of any credits unless the taxpayer is a “prohibited foreign entity” (“PFE”). This is more generous than the House version, which would eliminate transferability for most credits for projects that begin construction two years after enactment.
• PFE Rules: The Senate Finance Committee version redefines “material assistance” as a cost-based metric, in contrast to the House version, which generally covers any component, subcomponent, or applicable critical mineral in a supply chain. While still potentially onerous, the cost-based approach should be more manageable for the industry. However, unlike the House version, which would apply this restriction only to projects that begin construction at least one year after enactment, the Senate Finance Committee version would apply this restriction to any project that begins construction after 2025. Under the Senate Finance Committee version, the PFE provisions are not applicable to Section 45 PTCs or 48 ITCs.
• Vehicle Credits: The Senate Finance Committee version maintains the elimination of clean vehicle and charging credits 180 days after enactment, with added assembly/location requirements for some vehicles. Additionally, for Section 45W (i.e., the commercial clean vehicle credit), the Senate Finance Committee version applies certain criteria, such as the North American assembly requirement, for any vehicle placed in service during the 180-day period.
• Depreciation: Modified Accelerated Cost Recovery System (“MACRS”) depreciation would be eliminated for clean electricity facilities (including wind and solar) and energy storage technology placed in service after the passing of the legislation. However, the 100% bonus depreciation is permanently extended.