Tech-neutral tax credit removal could reduce clean energy deployment 237 GW by 2040, enough power for 35.7 million homes, resulting in 97,000 net fewer energy jobs, new analysis from Aurora Energy Research reveals. Electricity bills could increase $468 per year for New Yorkers, $348 per year for Texans
AUSTIN, TEXAS (AURORA ENERGY RESEARCH)—Aurora Energy Research, a leading global energy market analytics provider, today released a report quantifying the potential impact of removing clean energy tax credits on investment, job growth, and retail electricity bills.
The report finds that eliminating specific incentives from the Inflation Reduction Act (IRA) could result in $336 billion less investment, 237 gigawatts (GW) less clean energy generation capacity, and at least 97,000 net fewer American jobs by 2040 across the country’s seven competitive wholesale electricity markets, which represent around two-thirds of total U.S. power consumption.
Consumers could see monthly household energy bills rise by an average of 10%, with states like Texas facing an increase of up to 22% compared to a scenario with continued tax credit support.
The incoming administration has signaled an openness to reforming technology-neutral clean energy policies enacted in the Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (IIJA). One potential change under consideration is a revision to 48E, the technology-neutral Investment Tax Credit (ITC) and 45Y, the technology-neutral Production Tax Credit (PTC) for clean energy projects. In this report, Aurora models a future where the ITC and PTC specifically for wind, solar and battery storage deployment are removed and quantifies the impact on investment, jobs, and consumer electricity prices. Aurora’s report is fully independent and does not advocate for any specific party, policy, or technology.
According to the report, results are likely to be a conservative estimate of the impact of potential reform to clean energy policy currently under consideration. The Aurora study focuses on competitive wholesale power markets—which cover about two-thirds of American power demand—and excludes the impact to regulated energy markets. It focuses on wind, solar and battery storage rather than other zero-carbon technologies, and does not consider broader reform to other provisions in the IRA or IIJA. It also excludes the potential impact on the broader industry value chain, such as clean energy manufacturing.
The report reveals a potential reduction of $336 billion in investment and 237 GW of generation capacity over the next 15 years across U.S. competitive electricity markets. This is enough capacity to produce around 375 terawatt-hours (TWh) of electricity in 2040—which could power 35.7 million homes in a single year. On an absolute basis, New York and Texas are the states that would see the largest decline in investment—losing on average $4.4bn/year and $3.3bn/year, respectively, through 2040. The Great Plains and Midwest would also be significantly impacted, where total foregone renewable energy investment between 2025 and 2040 exceeds 3% of 2023 state GDP – up to 8% in states like Oklahoma.
The economic repercussions extend beyond investment, with broader implications for the labor market. The study estimates that removing tax credits would result in at least 103,000 fewer jobs in clean energy across construction, maintenance, and operations. This is offset slightly by a 6,000 job increase in fossil fuel jobs, resulting in a net loss of 97,000 jobs across the economy. These estimates do not capture the job market impacts from domestic manufacturing of wind, solar and batteries in the United States, the impact on regulated markets in many southeastern and western states, nor the indirect impact of lower investment on the labor market.
The report also estimates the impact of tax credit removal on consumers. Rolling back tax credits results in electricity bills that are 10%, or hundreds of dollars per year, higher on average by 2040 than in a scenario where tax credits are continued. Some parts of the country are impacted more than others. Monthly residential energy bills would rise most sharply in states like New York (+$39) and Minnesota (+$22), where residential power prices are already high, but also in states where residential energy demand is highest such as Texas (+$29) and Louisiana (+$21).
Oliver Kerr, Managing Director for Aurora Energy Research’s North American business, commented:
“Clean, cheap, and reliable energy has always enjoyed broad support nationwide. Our modelling shows that continued support for clean energy tax credits is a sure way to create jobs, boost private sector investment, and keep energy bills low for American consumers – all while reliably meeting rapidly growing demand for power across the country.”
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Notes to Editors
Aurora’s “Impact of clean energy tax credit rollback on U.S. investment, jobs, and energy prices” is available. Download the report below or get in touch with our commercial team for further information.
Media Contact:
Zinovia Fragkiadaki, Press Officer, EMEA
zinovia.fragkiadaki@auroraer.com
ABOUT AURORA ENERGY RESEARCH
Established in 2013, Aurora Energy Research is a leading global provider of power market forecasting and analytics for critical investment and financing decisions. Headquartered in Oxford, England, we operate out of 16 offices worldwide covering Europe, North & South America, Asia, and Australia. Our comprehensive services include market outlook packages for energy industry participants, advisory support, and innovative software solutions. We foster diversity with a team of close to 1000 experts with backgrounds in energy, finance, and consulting, offering unparalleled expertise across power, renewables, storage, hydrogen, carbon, and fossil commodities. Our mission is to facilitate the global energy transition through widely trusted quantitative analysis and high-quality decision support.
