US energy storage to ‘retain momentum’ post-reconciliation bill, near-term rush to complete projects

AI generated summary

The recent signing of the budget reconciliation bill by President Trump has significant implications for the U.S. energy sector, particularly affecting solar and wind projects. The bill, known as the 'One, Big, Beautiful Bill Act,' terminates the 48E Investment Tax Credit (ITC) and 45Y Production Tax Credits (PTCs) for these renewable sources unless construction begins within 12 months. However, energy storage technologies have retained their ITC, which is set to remain at a full rate of 30% until 2033, allowing for continued growth in this sector despite challenges posed by new regulations regarding foreign entities.

Analysts suggest that the energy storage sector is poised to maintain momentum due to a longer tax credit phase timeline and the flexibility in project deadlines. However, new rules requiring a certain percentage of project costs to come from non-prohibited foreign entities could complicate sourcing materials, particularly battery cells. As developers rush to start projects before the end of 2025 to avoid these restrictions, the market may see a shift towards domestic manufacturing and alternative battery technologies, although challenges such as trade tariffs and cost competitiveness remain significant hurdles for the industry.