1. The new energy policy reality post-OBBB
On July 4, 2025, President Donald Trump signed into law the One Big Beautiful Bill Act (OBBBA), a sweeping overhaul of federal energy and climate policy. The legislation marks a break from the Inflation Reduction Act (IRA) of 2022, which had created an expansive system of clean energy tax incentives. Under the OBBBA, many of those supports are now curtailed, reshaped, or phased out altogether. Deadlines for qualification have been shortened, new restrictions have been imposed, and domestic content requirements have been tightened. The intent seems to protect fossil fuel production while scaling back federal backing for clean energy and climate initiatives.
Expert analysis suggests that these changes will reshape the U.S. energy mix over the next five years in ways that are uneven across technologies. Wind and solar, which had been positioned for rapid growth under the IRA, now face steep challenges due to shortened tax credit timelines and more complex supply-chain constraints. Green hydrogen is also hit hard, which may see more than three-quarters of projects disqualified from incentives.
At the same time, the law strengthens support for carbon capture and continues favorable treatment for certain firm power sources like geothermal, hydropower, nuclear, and battery storage.
This divergence creates a new winners and losers framework in U.S. clean energy policy. While many sectors must recalibrate strategies in response to reduced federal incentives, others may find themselves unexpectedly advantaged. Geothermal in particular retains federal backing, positioning it as a strategic player in grid resilience and national security, even as other clean technologies lose momentum.
The thesis emerging from early assessments is that the OBBBA will not uniformly stall clean energy, but rather redirect capital and innovation toward selective opportunities notably in energy efficiency, geothermal, and technologies tied to carbon capture.
In this article we will take a closer look at the following points:
- Renewable energy landscape transformation: sectoral winners and losers
- Energy efficiency technologies: navigating the policy shift
- Market scenarios 2025-2030: technology-specific pathways
- State and private sector adaptation strategies
- Strategic outlook and investment recommendations
2. Renewable energy landscape transformation: sectoral winners and losers
2.1 Tax credit restructuring impact
The OBBBA has significantly reshaped the federal tax incentives that underpin renewable energy investments in the United States. By modifying eligibility timelines, imposing new restrictions and phasing out certain credits, the law alters the economics of multiple clean energy sectors. Some technologies face compressed development windows, while others benefit from continued or enhanced support.
Let's have a focus on the main tax credits:
45Y (clean electricity):
Wind and solar face major adjustments under the OBBBA. Projects must now be placed in service by the end of 2027 to qualify for technology-neutral 45Y production tax credits. Developers who start construction within 12 months after enactment can still qualify, but the compressed timeline forces a surge of installations in 2025-2026, followed by a slowdown. Offshore wind projects and those on federal land face particular challenges due to higher capital costs and complex permitting requirements.
48E (energy storage):
Energy storage retains eligibility for full tax credits if construction begins by 2033, with a phase-down for projects starting in 2034 and 2035. Lithium-ion components and other critical materials sourced internationally may face restrictions, adding uncertainty to project financing and procurement.
45V (hydrogen):
The 45V credit for clean hydrogen is limited to projects that begin construction before 2027. This drastically reduces incentives for green hydrogen, which requires long development timelines, while blue hydrogen (natural gas plus carbon capture) becomes relatively more attractive, benefiting from 45Q credits.
45Q (CCUS):
Carbon capture, utilization, and storage (CCUS) remains strongly supported. The 45Q credit has been harmonized so that CO used for enhanced oil recovery (EOR) now qualifies at the same $85/ton rate as permanent geological storage. This enhances project economics and encourages deployment of CCUS in industrial and energy sectors.
2.2 Geothermal's protected status
Geothermal power has emerged as a uniquely protected sector under the OBBBA, retaining access to federal investment and production tax credits for both utility-scale and enhanced geothermal systems (EGS). This stability supports long-term project financing and reflects recognition of geothermal's ability to provide reliable, carbon-free electricity around the clock, making it essential for grid resilience and national security.
Unlike wind and solar, geothermal enjoys strong bipartisan support and benefits from overlap with the oil and gas industry, including existing drilling technologies, skilled workforce, and investor familiarity, which shield it from the sharp credit reductions affecting other renewable sectors.
At the same time, technological advances in next generation geothermal systems are expanding the potential for geothermal deployment beyond traditional hot spots. Companies such as Fervo and XGS are now developing large-scale projects in Utah and New Mexico, leveraging oilfield expertise to advance geothermal drilling techniques. These projects align with policymakers' goals of energy security and infrastructure reliability, reinforcing geothermal's strategic position as a long-term energy solution.
2.3 Geothermal's protected status
The new FEOC framework introduces new compliance requirements on renewable energy projects that rely on foreign components, financing, or counterparties. While wind, solar, and storage projects are significantly affected by these restrictions, geothermal is less exposed due to its reliance on domestic exploration and drilling services and equipment, materials, and supply chains.
In parallel, the Department of the Interior's emergency permitting procedures offer accelerated environmental reviews, which particularly benefit geothermal and other utility-scale projects. Projects located on federal lands can now advance more quickly, partially offsetting the constraints and increased costs introduced by FEOC compliance and new tariffs.
These measures create a regulatory landscape where developers must navigate evolving compliance requirements alongside new permitting opportunities.
3. Energy efficiency technologies: navigating the policy shift
3.1 Current incentive landscape
The policy environment for energy efficiency technologies is undergoing significant change under the OBBBA. Most efficiency technologies do not benefit from dedicated federal tax credits, leaving deployment largely dependent on Department of Energy (DOE) programs, state-level incentives, and private investment. DOE industrial efficiency programs and research funding remain key support mechanisms, but availability and focus vary across states, creating uneven opportunities for developers and industrial users.
3.2 Waste heat recovery system focus
Waste heat recovery (WHR) systems face a mixed landscape. These technologies have substantial industrial applications and market potential, allowing facilities to convert otherwise wasted thermal energy into electricity or useful heat. While direct federal incentives are absent, WHR projects can access indirect support through utility programs or state-level initiatives. Technology readiness and deployment barriers, including permitting and capital-intensive equipment, continue to slow adoption, though regions with active industrial decarbonization programs provide opportunities for pilot projects and scaling.
3.3 Other efficiency technologies
Other efficiency technologies, such as industrial heat pumps, combined heat and power (CHP) systems, and building efficiency solutions, continue to face financing and market challenges due to the absence of dedicated federal tax credits. Industrial heat pumps encounter market positioning issues, particularly around ownership and eligibility for incentives, while combined heat and power (CHP) systems benefit from long-standing technical maturity but still face limited federal support. Building efficiency technologies, such as insulation or energy management systems, remain heavily reliant on state programs, corporate decarbonization initiatives, or utility-backed incentives. Geothermal heat pumps face challenges in claiming incentives. Companies that install and retain ownership of the pumps, used to heat or cool buildings, struggled with the "limited use property" issue, which made it difficult to claim tax credits for equipment that cannot be removed. The OBBBA waives this limitation, removing a major barrier to project deployment and clarifying incentive eligibility for geothermal heat pump technologies.
4. Market scenarios 2025-2030: technology-specific pathways
Looking ahead to 2025-2030, the energy efficiency and clean energy markets face two plausible pathways under the current policy landscape.
4.1 Scenario 1, selective technology acceleration
Scenario 1 envisions a more favorable trajectory for certain technologies such as geothermal but also zero emission and stable clean energy technologies as waste heat recovery systems. These sectors benefit from preserved federal incentives and the gaps left by reductions in other clean energy areas, allowing developers to focus on scalable, bankable projects. State-led programs further compensate for federal pullbacks, providing targeted incentives and grants that sustain deployment of high-value technologies.
Corporate sustainability commitments also play a critical role in maintaining investment momentum, as companies continue to prioritize energy efficiency to meet ESG goals and reduce operational costs. In addition, ongoing technology cost reductions, driven by experience curves and private R&D, improve the competitiveness of geothermal and other efficiency solutions relative to curtailed sectors like wind and solar. Under this scenario, deployment is concentrated where financial and regulatory certainty is highest, favoring established project developers and industrial partners with the capacity to capitalize on incentive windows.
4.2 Scenario 2, broad clean energy deceleration
In contrast, Scenario 2 shows industrial decarbonization efforts moving more slowly, with manufacturing emissions reduction and industrial clean energy adoption taking longer to scale.The curtailment of federal support for many clean energy projects, combined with ongoing uncertainties related to supply chains, FEOC restrictions, and tariffs, reduces the overall flow of projects and slows the adoption of emerging efficiency technologies. This scenario could lead to consolidation across technology developers, as smaller firms struggle to secure financing and navigate complex regulatory landscapes. Extended timelines for commercial deployment of new technologies are also expected, with projects being delayed or scaled back until state programs or corporate offtake agreements can provide sufficient support. Efficiency technologies such as industrial heat pumps, CHP systems, and building energy solutions may still see incremental growth, but largely in regions or sectors where economic incentives or corporate demand are strong enough to overcome federal policy gaps.
Overall, these scenarios highlight how the uneven policy environment and differential treatment of technology types under the OBBBA can create divergent outcomes. While certain sectors may accelerate due to targeted incentives, cost improvements, and corporate sustainability efforts, the broader deceleration risk underscores the importance of strategic planning and financing flexibility to sustain deployment across efficiency and select clean energy technologies.
5. State and private sector adaptation strategies
In response to the federal retrenchment of clean energy incentives under the OBBBA, states and the private sector are stepping in to maintain momentum for efficiency and distributed energy projects.
Regional leadership, particularly in California, New York, and the broader Northeast, is driving state-level programs that support project development despite reduced federal support. California continues to lead with ambitious clean energy targets, aiming for a 74% clean energy share in 2025, supported by an extended cap-and-trade program that funds infrastructure and climate initiatives. New York is advancing all-electric building mandates for new constructions by 2026, while Northeast states have established declining caps for power plant emissions, collectively strengthening regional climate commitments.
At the same time, corporate procurement programs are playing a critical role in sustaining clean energy and efficiency investments. Companies with high thermal loads, including data centers, steel, cement, and ceramics operations, are deploying waste heat to power systems and geothermal projects where ROI is strong, often leveraging long-term offtake agreements and voluntary decarbonization commitments to ensure project bankability. Utilities are adapting in parallel, evolving rate designs and implementing demand-response programs to optimize peak load management and integrate distributed generation, enhancing grid reliability while incentivizing efficiency improvements.
Complementing these efforts, technology partnerships and innovative financing models such as Equipment-as-a-Service allow companies to access advanced efficiency equipment without heavy upfront capital expenditure. AI-driven analytics and performance-based contracting further improve project finance and risk management.
Emergency permitting procedures from the Department of the Interior and accelerated environmental reviews by the Bureau of Land Management are also speeding up project execution, particularly for utility-scale geothermal and other renewable deployments.
Collectively, these state actions, corporate initiatives, utility programs, and technology partnerships form a resilient ecosystem that offsets some federal reductions, ensuring continued deployment of key efficiency technologies, supporting U.S. energy security, and maintaining momentum toward decarbonization despite policy uncertainty.
6. Strategic outlook and investment recommendations
The new policy environment created by the OBBBA requires energy developers and investors to rethink their strategies. Federal pullbacks have reshaped incentives across the clean energy sector, making risk assessment more important than ever. Companies must evaluate exposure to FEOC restrictions on supply chains, navigate compressed eligibility windows for federal credits, and adapt to evolving permitting frameworks. At the same time, technologies that combine resilience, scalability, and bipartisan support are emerging as priority opportunities. Among these, geothermal stands out. Geothermal energy benefits from stable federal support and growing technological innovation, particularly through enhanced geothermal systems that unlock resources well beyond traditional hotspots. Its ability to deliver carbon-free power around the clock makes it a cornerstone for grid reliability, industrial baseload, and national security. Meanwhile, WHR systems, though lacking a dedicated federal incentive, could receive support through industrial efficiency programs, DOE funding streams, and state-level initiatives. Their value proposition capturing and reusing wasted thermal energy resonates strongly in industries under pressure to reduce costs and emissions simultaneously.
Financing strategies are evolving to match these opportunities. Developers and investors are increasingly turning to blended approaches that combine state incentives, DOE grants, corporate procurement agreements, and innovative financing tools such as equipment-as-a-service. These models help offset the capital-intensive nature of geothermal and WHR projects, making them more attractive to both institutional investors and corporate offtakers.
At the same time, utility engagement through demand-response programs and rate reforms creates additional pathways for integrating these technologies into the broader energy system. Looking ahead, industry stakeholders must continue to advocate for policies that recognize the strategic value of firm, low-carbon power and industrial efficiency solutions. Clear permitting frameworks, stable incentive signals, and targeted support for emerging technologies will be essential to scale deployment through the next decade.
The evolving policy landscape under the OBBB has created both challenges and opportunities across the clean energy sector. While wind, solar, and hydrogen face tighter timelines and restrictions, technologies like geothermal and waste heat recovery are emerging as resilient pathways for industrial decarbonization and energy security. With state-level leadership, corporate procurement, and innovative financing models, the private sector is already adapting to fill policy gaps. For developers and investors, the priority is clear: focus on scalable, reliable solutions that deliver both environmental and economic value. The transition is shifting, but far from slowing down.
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Sources:
Canary media: Geothermal survives in big, beautiful' budget bill | Canary Media
Norton Rose Fulbright: Effects Of "One Big Beautiful Bill" On Projects | Norton Rose Fulbright - July 2025
Energy Policy Columbia: Assessing the Energy Impacts of the One Big Beautiful Bill Act - Center on Global Energy Policy at Columbia University SIPA | CGEP %
World Energy: DOI Implements Emergency Permitting Procedures for Geothermal Energy
Reuters: Baker Hughes joins giant California geothermal power project | Reuters
