A new analysis from the MIT Center for Energy and Environmental Policy Research reveals that while the One Big Beautiful Bill Act of 2025 (OBBBA) slowed down renewable deployment, the market fundamentals for solar and battery storage remain largely intact.
The research commentary, titled “Glass Half Full: Building a Decarbonized U.S. Power Sector” and authored by Lily Bermel, shows that the U.S. solar and energy storage sectors are proving resilient despite major rollbacks to federal clean energy incentives.
The law rescinded most of the Inflation Reduction Act’s (IRA) grant and loan programs and phased out legacy wind and solar tax credits. Despite these legislative headwinds, the modeling shows that the clean energy transition has been slowed rather than reversed. Looking at the 2025–2035 window, the current OBBBA policy environment preserves 74% of the new clean energy capacity and 71% of the clean generation that the full IRA trajectory would have delivered.
According to the report’s findings, solar and battery storage are absorbing the policy shock much better than other technologies like onshore wind. On average over the 2025–2035 period, the OBBBA scenario preserves a significant portion of the expected IRA gains. Utility-scale solar PV preserves 80% of new capacity and 82% of new generation.
Meanwhile, distributed solar is highly insulated from federal policy changes, preserving 95% of both capacity and generation. Battery storage retains 83% of its projected capacity buildout under the original IRA trajectory.
The report labels solar as “credit-sensitive but not credit-dependent” because falling module costs and strong underlying economic competitiveness are allowing utility-scale solar to withstand the phase-out of the tax credits. Distributed solar remains largely unaffected because its deployment is primarily driven by state-level policies, retail electricity rates, and net metering rather than federal tax credits.
Battery storage maintains strong numbers because it retained tax credit access under the OBBBA, though its market opportunity shrunk slightly due to reduced solar deployment.
While the sector remains viable, the removal of full tax credits does create a deployment lag. The analysis frames this lag by calculating how many years later the OBBBA scenario achieves the same deployment metrics as the original IRA trajectory.
For utility-scale solar, the policy shift introduces an average capacity lag of 2.6 years and a generation lag of 2.3 years. Battery storage faces an average capacity lag of 2.5 years, while distributed solar sees a minimal lag of just 1.0 year. By 2035, these delayed additions accumulate to a total of 29 deployment-years of lost utility-scale solar capacity and 27 deployment-years of lost battery storage capacity.
A key takeaway for project developers is that federal tax credits are no longer the primary driver or bottleneck for the industry. The report notes that even under the full IRA trajectory, supply-side barriers like slow permitting and lagging transmission buildout were preventing the sector from reaching its full potential.
The modeling uses an identical annual buildout cap for both scenarios to account for these constraints. Because of this, the author argues that policy priorities should pivot away from trying to restore full tax credits, which would only recover about 2.5 years of deployment lag without expanding the market ceiling.
Instead, the industry needs aggressive federal permitting reform and transmission expansion to lift the deployment ceiling entirely and reduce project carrying costs. Furthermore, the report highlights that variable solar and wind cannot completely displace dispatchable fossil capacity on their own.
To close the resulting emissions gap, policymakers and investors must focus on deploying short-duration battery storage alongside long-term clean firm technologies to handle grid reliability as older fossil assets face eventual retirement.
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