July 10, 2025
Industrial analysts say that the One Big Beautiful Bill Act by President Donald Trump (OBBBA) is a dramatic shift on the American energy market. Policy must adapt outside of OBBBA to guarantee the growth of power supply in the United States. Without these actions, the United States run the risk of losing its competitive advantage in the global AI race.
The extensive legislation introduces new restrictions for investments in renewable power, draws up clear winners of emerging technology and makes Upstream oil and gas an important priority, in which significant policy uncertainty is introduced that can influence long-term investment decisions in assets with 30-year-old lifference.
Level of power supply threatens the AI race
“With such dramatic uncertainty that confronts new investments in the power supply, thermal retirement will probably be postponed, energy prices will rise and large taxes will be delayed,” said David Brown, director of Energy Transition Research for Wood Mackenzie. “Without reform, new large cargo rates and domestic technology innovation, the US risks the lead it has in the global AI race.”
Brown adds that the withdrawal of tax credits for clean energy will influence both supply and demand.
“The early sunset of the production tax credits will reduce the future energy demand of the energy of clean energy, while delays can delay to new range, because facilities are competing for scarce schedule capacity,” he said.
Renewable energy stands for challenges
The OBBBA limits the window considerably for tax credit for full value qualifies for wind and solar projects, for which placement in services are required before December 31, 2027. Projects that start with construction can be eligible for mid -2030 within 12 months of adoptionCrucial a crucial “safe haven” period.
It is expected that solar installations will increase in 2025-2026 as developers hurry to get deadlines, while wind activity will remain robust until 2029 if grandfather projects will reach completion. Permitted projects are well positioned, but non-proposed developments are confronted with growing uncertainty, because allowing bottlenecks that are in danger of pushing the completion data outside the eligible window.
As a result, the long -term prevention for renewable energy sources are confronted with a downward route. For solar energy, Wood Mackenzie projects can fall 10-year-old installations by 17%, so that volumes can be reached as low as 375 GWAC, with the removal of the tax credits. Wind 10-year-old installations will decrease by about 20% with further uncertainty ahead.
New restrictions escalate from 40% to 60% compliance thresholds up to 2030, so that the dependence on Chinese manufacturers is punished.
On July 7, Trump issued an executive order, which means that market-disturbed subsidies for unreliable foreign energy sources, which can further undermine the economy of solar and wind projects, in particular when they are viewed next to the OBBBA.
Energy Storage Facies Supply Chain Tegenwind
Although it is eligible for the eligible tax credit up to 2030, storage is confronted with a heavy foreign entity of concern (FEOC), which will probably exclude the purchase of Chinese cells. The risks and costs of supply chain shifts will put down on the growth of the storage, even though it is one of the few means that can be added quickly to support the growing demand.
EVs take a big hit
EV stimulas are eliminated, which means that Wood Mackenzie’s US Battery Electric Vehicle Market Share -Prepeling Before 2030 is reduced from 23% to 18%. Most EV growth will now come from companies with established supply chains or non-Domestic players who use Bevs to enter Premium markets.
Mixed results for emerging technologies:
- Green hydrogen pipeline in danger: It is unlikely that around 75% of the American green hydrogen pipeline will be eligible for section 45V tax credits due to the accelerated output of 2027.
- CCUS gets a boost: Carbon retirement developers benefit from extensive 45Q credits, where improved oil extraction (EOR) now gets the same value as geological sexwes’, making EOR more attractive as a final destination for established CO2. This in particular benefits operators with existing CCUS-Eor infrastructure.
- Nuclear and geothermal support: Both sectors retain primary inflation reduction ACT (IRA) incentives. Nuclear receives extra support through renewed SMR financing, while geothermal benefits benefit from compulsory annual lease sale that replaces the previous biennial schedule.
Stream -up sector wins large
The OBBBA offers a large boost for the electric industry, such as it:
- Mandates for three -month lease in nine Western states.
- Adds 30 wave of Mexico lease sale for 15 years.
- Royalty Royalty rates from 16.67% to 12.5% reduce royalty rates.
- Reopen Alaska’s Arctic National Wildlife Refuge for Competitive Leasing.
- Met methane costs until 2035.
- Makes a complete deduction of intangible drilling costs possible.
- Expands mass bonus debit to production -unanimous good until 2031.
No revival of domestic coal, not even with larger incentives
The Ministry of the Interior has opened at least 4 million new hectares of federal countries for leasing coal in the lower 48 states and Alaska.
Wood Mackenzie does not see the OBBBA in itself that an incremental Greenfield Thermal Coal Mine projects stimulate. In theory, the sale of new federal coal contracts is expected to be compensated for lower royalty income. However, the falling coal demand will compensate for any expected sales profits.
Global market implications
The OBBBA will have an impact on the global energy transition.
“The policy regulations increase the chance of Wood Mackenzie’s Delayed energy transition scenario for the US“Said Brown.” The legislation serves as a harbinger of central challenges with which energy investors are confronted, the management of political whiplash when investing in assets with 30-year lifetime in the midst of dramatic policy fluctuations every election cycle. ‘
The elimination of EV-tax credits can shrink the global market for lithium-ion batteries in 2030 in 2030 in 2030, reducing the demand for lithium, nickel, cobalt and graphite, although domestic producers can benefit from new provisions.
Carbon markets, methane instructions shift
Direct air shelter in combination with improved oil extraction now receives the same $ 180/TCO tax credit as geological sexWestration, which may reduce carbon set to oil extraction instead of permanent storage. The 10-year delay in the costs of methane waste until 2034 will delay the efforts of reduction by operators in the third largest methaneter in the world.
Tags: market data, policy, wood Mackenzie
