Monarch’s Analysis of Energy Credits After Senate & House Passage of Big Beautiful Bill

The now “fully” passed bill heads to the President’s desk for signature (anticipated July 4, 2025).  While not an ideal outcome, we are pleased that Monarch’s persistent direct advocacy resulted in several improvements over House Resolution 1 as well as both the initial Senate Finance Committee text and the proposed legislation originally brought to the floor.  In fact, the final law retained credit eligibility for solar and wind projects under a begun construction exception consistent with what Monarch suggested via multiple senate/staff/committee channels within hours of the final legislative text being released on Saturday, June 28.

Notably, the new law ensures viable energy credit investment and purchase opportunities for the long term, and in our view, continues “business as usual.” While the tenor for solar and wind has been abbreviated, credits for some technologies (sustainable fuels) have been extended and others (fuel cells) have been added.  Monarch will continue to be a market leader and innovator in all energy credit areas, and we are proud of the work we’ve done with existing and new developer partners throughout this legislative process.  Those now stronger partnerships afford a broad spectrum of opportunities and structures from credits involving solar, storage, wind, geothermal, fuel cells, and other electricity generating or equipment manufacturing facilities, as well as credits from sustainable fuels and carbon sequestration, among others.Snapshot of the passed bill and certain energy credits:

1. Solar and Wind – credits available for projects that commence operating as late as 2030
   1. Projects need to either
      1. Begin construction by July [4], 2026 (anniversary of actual presidential signature) (project would then have until the end of 2030 to commence operations) OR
      2. Commence operating before the end of 2027
   2. Projects that “begin construction” in 2026 or later will have restrictions on component sourcing (Monarch will underwrite and monitor compliance)
2. Storage (battery), geothermal, and fuel cells – credits available for projects that commence operating as late as 2036
   1. Projects that “begin construction” in 2026 or later will have restrictions on component sourcing (Monarch will underwrite and monitor compliance)
   2. In addition to potential component restrictions, projects need to begin construction by the end of 2032
   3. Fuel cell projects eligible if begin construction after December 31, 2025
3. Clean Fuel Production – credits available for production through the end of 2029 (extended two years)
   1. Added foreign ownership/assistance prohibitions
4. Advanced Manufacturing Production Credit (manufacture of energy production components) – continues at current level through 2029, with 25%/annum phase down thereafter
   1. Adds restrictions on foreign ownership and component sourcing
   2. No credits for wind components manufactured/sold after 2027
5. Transfer Credits – eligible for the credit types identified above.