Unpacking the One Big Beautiful Bill Act: New Energy Laws and Their Impacts on Residential and Commercial Sectors

The "One Big Beautiful Bill Act" (OBBBA or OBBB), signed into law by President Trump on July 4, 2025, represents a major overhaul of U.S. energy policy through budget reconciliation. Building on modifications to the Inflation Reduction Act (IRA) of 2022, this legislation scales back incentives for clean energy while bolstering fossil fuels and carbon capture technologies. Proponents hail it as a step toward "energy dominance" by reducing regulatory burdens and promoting domestic production, but critics argue it will raise costs, hinder clean energy growth, and exacerbate emissions. In this post, we'll break down the key energy-related provisions and explore their ripple effects on residential and commercial energy landscapes.

Key Energy-Related Provisions in the One Big Beautiful Bill Act

The OBBBA introduces tighter timelines, foreign entity restrictions, and phase-outs for clean energy tax credits, while enhancing support for traditional energy sources. Here's a summary of the main changes:

  • Renewable Energy Tax Credits (Wind, Solar, and Storage): Projects must be placed in service by December 31, 2027, or begin construction by July 5, 2026, to qualify—a significant acceleration from prior IRA deadlines (e.g., 2029-2030 for some projects). New Foreign Entity of Concern (FEOC) rules prohibit credits for projects with ownership ties to certain foreign entities (e.g., China-linked) and require increasing shares of components (40% in 2026, up to 60% post-2029) to be sourced outside restricted countries. Domestic content requirements for Investment Tax Credits (ITC) rise to 45% for projects starting after June 16, 2025. Wind component credits phase out after 2027.
  • Electric Vehicles (EVs) and Clean Vehicles: The Section 30D clean vehicle credit ends between September 30, 2025, and June 30, 2026, eliminating the $7,500 federal EV tax incentive. Battery-related credits (e.g., Section 45X for advanced manufacturing) phase out for critical minerals (except metallurgical coal) after 2033, with FEOC material sourcing thresholds rising from 60% in 2026 to 85% post-2029. Alternative vehicle refueling property credits (e.g., EV charging) expire by June 2026.
  • Residential Clean Energy Incentives: The Section 25D residential clean energy credit (30% for solar panels, battery storage, etc.) terminates between September 30, 2025, and June 30, 2026. Clean hydrogen credits end by 2027.
  • Fossil Fuels and Carbon Capture: The Act increases oil and gas leasing on federal lands and reduces royalty rates for fossil fuel extraction. It enhances the Section 45Q tax credit for carbon capture and storage (CCS), equalizing values for sequestration and utilization, which could boost oil production via enhanced recovery and support blue hydrogen. Credits for existing nuclear plants and clean fuel production are maintained or extended.
  • Other Changes: Delays funding for agricultural and forestry conservation programs. Makes Opportunity Zones permanent, potentially attracting investments to underserved areas for energy projects.

These provisions aim to prioritize "pro-growth" policies but effectively repeal or curtail many IRA clean energy incentives, shifting focus toward fossil fuels.

Impacts on the Residential Energy Scene

For homeowners, the OBBBA accelerates the end of key subsidies, making clean energy adoption more expensive and potentially increasing overall household costs. The phase-out of the 25D credit could save up to $9,000 on a $30,000 solar installation if acted on before the deadline, but post-expiration, residents face higher upfront costs for solar panels and battery storage. EV incentives vanishing by mid-2026 will reduce affordability, leading to 27-41 million fewer EVs on roads by 2035 (20-34% below baseline projections).

Broader economic effects include rising energy bills: National average household expenditures are projected to increase by $78-192 annually by 2035 (2-4% rise), with half to two-thirds from higher mobility fuels (e.g., gasoline, EV charging) and 25-50% from electricity rate hikes (2-4%). Some states, like South Carolina and Florida, may see even steeper increases of $115-314 per year. This could strain budgets, slow home electrification, and delay emissions reductions, though fossil fuel boosts might stabilize short-term supply.

Impacts on the Commercial Energy Scene

Commercial and industrial sectors face disrupted investments and higher operational costs due to compressed timelines and supply chain restrictions. The shortened window for wind and solar credits risks $522 billion in clean energy projects, including $263 billion in wind, solar, and storage facilities and $110 billion in manufacturing. FEOC rules add complexity, potentially delaying projects and raising costs by limiting access to global (e.g., Chinese) components.

Power generation projections show a 53-59% drop in new clean capacity additions through 2035, reducing overall capacity by 340 gigawatts and making it harder to meet rising electricity demand. Wholesale electricity prices could surge 25% by 2030 and 74% by 2035, with consumer rates up 9-18%. Industrial energy costs may rise $7-11 billion annually by 2035 (3-4% increase), driven by higher natural gas and electricity prices.

Economically, the Act is forecast to cause 760,000 job losses by 2030 and a $980 billion cumulative GDP hit, with states like Texas and Kentucky hardest affected. On the flip side, CCS enhancements could benefit oil producers and blue hydrogen projects, potentially increasing oil output through enhanced recovery. Emissions may rise 19-79% in the power sector by 2035, putting U.S. GHG levels at 27-44% below 2005 baselines—worse than pre-OBBBA trajectories.

Conclusion: A Shift Toward Traditional Energy with Long-Term Trade-Offs

The One Big Beautiful Bill Act prioritizes fossil fuel expansion and fiscal reforms but at the cost of clean energy momentum, potentially leading to higher prices, job losses, and environmental setbacks for both residential and commercial users. Homeowners should act quickly on incentives before they expire, while businesses may need to pivot toward compliant supply chains or fossil-based alternatives. As implementation unfolds, monitoring state-level responses will be key. This legislation underscores the ongoing tension between energy affordability, security, and sustainability in America's evolving landscape.

Links (References)

Here are the sources cited above, with direct links for further reading:

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