Everyone thought Trump would kill the IRA, he didn't

What happened

Last week the House Ways and Means Committee released its draft budget reconciliation bill, the first concrete legislative attempt by House Republicans to revise the Inflation Reduction Act (IRA). This follows President Trump’s January executive order targeting specific IRA disbursements, which we analyzed in a previous article.

Instead of tearing down the IRA, the bill trims and reshapes it:

• Key clean electricity credits (PTC 45Y and ITC 48E) remain fully intact through 2028 and gradually phase down through 2032.
• Credit eligibility now requires projects to be "placed in service" rather than having merely "begun construction," increasing execution risk but accelerating urgency.
• Foreign Entity of Concern (FEOC) restrictions disqualify projects using equipment or capital from Chinese or other blacklisted entities.
• Tax credit transferability, critical to financing for many developers, phases out two years post-enactment.
• Residential solar (25D), EV (30D, 45W), home efficiency (25C), and charger infrastructure credits (30C) all expire at the end of 2025, with limited transition relief.

Crucially, this bill is not yet law. House leadership is aiming for a floor vote before the Memorial Day recess (May 26th). From there, the bill moves to the Senate in June, where amendments are possible, especially around EVs, hydrogen, and transferability. It’s one big step forward, but the process is far from over.

Impact on our Investment Case

Utility-scale solar: overlooked and now reaccelerating

Utility-scale solar in the U.S. is now estimated to be up to 40% cheaper per MWh and nearly 50% faster to deploy than new gas-fired power plants, based on recent levelized cost of electricity (LCOE) benchmarks and average construction timelines. This cost and speed advantage matters as electricity demand surges, driven by data centers, EV charging, and electrified heating systems.

Crucially, utility-scale solar still benefits from the Investment Tax Credit (48E) and the Production Tax Credit (45Y), both preserved in full through 2028 and then gradually phased down through 2032.

The shift from a "begin construction" to a "placed in service" trigger sharpens execution priorities and makes permitting and grid interconnection timelines more critical. Projects now need to be fully built and energized before qualifying for subsidies, which is likely to accelerate decision-making and benefit players tied to grid buildout.

We are positioned in key U.S. utility-scale solar players (e.g., First Solar, Array, and Nextracker Inc) that are set to benefit from both cost leadership and alignment with IRA-compliant supply chains.

Grid infrastructure: the bottleneck nobody talks about

No grid, no transition. The new timing requirement makes interconnection readiness a hard constraint, reinforcing the value of companies that supply or build grid systems.

With 30% of our portfolio in this theme, from transformers to grid services, we are positioned in the one segment that every renewable project depends on. Lead times for transformers already stretch into 2029. This is where supply meets constraint, and where pricing power thrives.

Domestic manufacturing: FEOC = free pass for U.S. players

The FEOC restrictions are sweeping. Any significant ownership, licensing, or even payment links to designated foreign entities (think Chinese solar and battery suppliers) risk disqualifying a project. This policy shift is a direct subsidy to U.S.-based manufacturers, and we are already there.

Our exposure includes manufacturers building domestically with IRA-qualified supply chains and rising margin visibility.

Residential solar and EVs: subsidy cuts ahead

Several tax credits claimed directly by households, such as rooftop solar (25D), new and used EV purchases (30D, 25E), and home charging equipment (30C),are set to expire after 2025. That hits cash-sale rooftop solar and EV adoption. However, bonus adders such as domestic content and energy communities remain untouched, a positive surprise.

Note that we are not exposed to residential solar installers. On EVs, we have avoided U.S. players exposed to volatile subsidy regimes and focused instead on China and Europe, where demand and visibility is stronger.

Wind manufacturing and nuclear: mixed outcomes

The reconciliation draft proposes ending the 45X advanced manufacturing credit for wind components after 2027, while preserving the broader Production Tax Credits (45Y) for electricity generation through 2028, with a gradual step-down until 2032. This dual-track outcome creates pressure on U.S.-based wind component manufacturers but leaves project developers with continued incentive visibility.

The 45U credit for existing nuclear generation will also begin phasing down after 2028, ending entirely by 2032, a challenge for small modular reactor (SMR) timelines.

We are not exposed to nuclear technologies, and our wind exposure is focused on diversified names (like GE VERNOVA INCO.), as well as Chinese manufacturers with strong domestic markets.

China exposure: geographically hedged

FEOC risks are real but not relevant to us. Our China-linked investments are either entirely domestic, like offshore wind players serving the Chinese coast, or focused on leading batteries players active primarily into Asia and Europe.

None of our holdings are meaningfully reliant on the U.S. market. Ironically, this decoupling may even be constructive: easing competitive pressure and improving margins in their core regions.

Our Takeaway

Across the board, the draft bill came in at the bullish end of expectations, it preserves key tax credits, keeps bonus adders untouched, and avoids the feared 2025 cliff.

This bill is not final. Several implementation details remain undefined, especially regarding how FEOC restrictions will be interpreted and enforced. The Senate is expected to propose amendments in June, and final legislation will only take shape once both chambers agree.

A broader Republican tax-and-spending bill is also advancing in parallel, with some lawmakers calling for deeper clean energy cuts. But as of now, the House reconciliation draft remains the clearest policy proposal impacting IRA tax credits

Trump’s reconciliation bill trims excesses, redirects capital to domestic supply chains, and accelerates execution timelines. But it leaves the core investment case for clean energy not only intact, but more visible and de-risked.

We are exposed to the structural winners: domestic utility solar and grid infrastructure. Valuations remain compelling at 1.6x forward 12-month sales and 20x forward earnings, while expected growth remains strong with a 27% 3-year earnings CAGR. We believe this could mark the beginning of a broader rebound as uncertainty continues to ease.