Under the Inflation Reduction Act passed during the Biden administration in the US, significant transferable tax credits were given to projects for power production from renewable sources and energy storage. Now, however, with the need to reduce the large US fiscal deficit, the wave of construction of renewable energy projects, and the Republican Party’s different priorities, the House of Representatives has passed a tax bill that includes the cancellation of these tax benefits, which could have an adverse effect on renewable energy companies.
Enlight Energy (TASE: ENLT) fell 5.55% and Doral Energy (TASE: DORL) fell 4.59% today. Both companies have large projects in the US. Both insist, however, that their projects will be completed before the change in the law comes into effect.
Under the tax bill, tax benefits will be cancelled only for projects on which construction has not begun within the next three months, or which are not connected to the power grid by the end of 2028. Under the original version of the bill, the tax credits were to have been gradually phased out, but in the final version they will end abruptly at the start of 2029.
Enlight, for example, is due almost to triple its solar production capacity in the US from three gigawatts today to 8.6 gigawatts by the end of 2027, raising its annual revenue from $500 million to $1.4 billion. The company will be entitled to the tax credits on this revenue, but later projects will be impacted by the cancelation of the credits.
Doral stresses that its flagship projects, including those in Indiana for which financial closing (including in respect of the tax credits) was obtained three days ago, will be ready before the tax credits deadline.
More vulnerable is solar energy technology company SolarEdge (Nasdaq: SEDG), whose share price is down 25%, thus wiping off all the gains it made following the release of its good first quarter financials two weeks ago.
Incoming Doral CEO Yoni Hantis told “Globes”: “The amendment to the bill, in its current version, allows full exploitation of the tax benefit for projects on which construction work starts in the near future or that are connected to the grid by the end of 2028, and thus gives regulatory certainty to Doral’s mature projects in the US. The benefit applies to the 1,600 megawatt Indiana project, of which the first part is already connected to the grid, and the remaining parts are under construction. The same applies to a series of additional projects that will get underway and will be connected by 2028.
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“Demand for electricity in the US is at a peak, and the most efficient, quick, and clean way of meeting it is through massive construction of renewable energy installations. Before anything else, it’s the economic characteristics of this sector that create the market and economic equilibrium that makes renewable energy the most correct, cheapest, and worthwhile option for the US economy, and represent a sound basis for continued growth of the global energy market, in any regulatory scenario.”
Published by Globes, Israel business news – en.globes.co.il – on May 22, 2025.
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