HomeFinancial Headwinds and Tailwinds Swirl Amid OBBBA
Tax in Transition
Helping utilities navigate corporate tax reform
By Lee Watkins, Chief Strategy Officer, PowerPlan
July 7, 2025
On July 4th, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law. At first glance, the energy provisions may appear to be just a small component of the massive legislative package. But in practice, their implications carry significant weight for the future of the energy sector.
Namely, they signal the end of predictable, incentive-driven renewable deployment. Taking its place is a more complex environment, where financial engineering, strategic capital allocation, and regulatory acumen will be paramount for success.
Here are the bill’s key updates as they pertain to regulated utilities.
Corporate Tax Provisions: Holding Steady
There was no change to the corporate tax rate, which remains at 21%. While long-term capital planning adjustments will be necessary in light of other provisions, the steady corporate tax rate offers a constant that makes this process a little bit easier.
The bill also restores 100% bonus depreciation, but regulated utilities are generally excluded. However, OBBBA includes full expensing of domestic R&D, which could encourage innovation in grid modernization, carbon capture, and advanced nuclear.
The Great Reversal: Restructuring Clean Energy Tax Credits
Yes, we may see innovation spurred by a steady corporate tax rate and domestic R&D expensing, but this will likely manifest primarily in a technology-specific, fossil-fuel-accommodating context—because OBBBA may stymie clean energy innovation without the incentive of tax credits.
The bill’s most direct impact on regulated utilities comes from accelerated phase-outs of Sections 45 (wind) and 48 (solar). In order to qualify for full credits, construction on wind and solar projects must begin within 12 months of the bill’s enactment or must be placed in service by December 31, 2027. This significantly shortens the runway from the Inflation Reduction Act’s (IRA) envisioned timeline of phase-outs beginning after 2032. OBBBA also completely eliminates the gradual phase-down schedule, meaning credits are terminated entirely for projects that fail to meet the tight timelines.
Favorable Treatment for Other Technologies
Opposite clean energy phase-outs, OBBBA takes a clear stance on other types of energy technologies, like nuclear, geothermal, and hydropower—preserving eligibility, and in some cases extending, full tax credits for “clean firm” power.
To Summarize: Implications for Capital Planning
If we were to visualize the impact of these provisions on utility capital planning, the output would look a bit like a barbell. On one end, the bill incentivizes a select group of large-scale, dispatchable “clean firm” energy sources, like nuclear, geothermal, and hydropower. On the other end are broader incentives that encourage infrastructure investment, like R&D expensing. But squeezed in the middle, with a significantly shortened incentive window, are the utility-scale wind and solar projects that have dominated new capacity additions for the past decade.
What Utilities Should Do Now
For many utilities, the fundamentals haven’t changed dramatically, but the urgency has. OBBBA demands immediate reevaluation of utility strategy and operations. Survival and success in this new era will require agility, disciplined capital allocation, and a renewed focus on core utility functions.
This bill reinforces the need to:
- Refine capital forecasts and align with new tax realities.
- Accelerate project timelines to meet eligibility windows.
- Reevaluate rate case strategies for timely cost recovery.
- Model tax scenarios to understand long-term financial impacts.
PowerPlan Is Here to Help
The bill may have narrowed the window for certain energy incentives, but in turn it has widened the need for precision, agility, and strategic foresight. PowerPlan is here to help you meet that challenge.
We understand the complexity of new tax legislation. Our solutions are built to help utilities navigate regulatory and tax-driven shifts with confidence. From capital planning and tax forecasting to rate case support and scenario modeling, we provide the tools and expertise utilities need to stay ahead of change.
The Energy Horizon
This legislation is just one chapter in an ongoing story of tax reform. Utilities should take this opportunity to ensure their systems and processes are ready not just for today’s changes—but for whatever comes next.
To help you prepare, we’ve published a comprehensive white paper on how utilities can build resilience and readiness in the face of ongoing tax reform.
Download the white paper here.
