Repealing energy tax credits would raise electricity costs, study says
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Repealing technology-neutral clean energy tax credits would raise the cost of energy for consumers and industry across 19 states from 2026 to 2032 by increasing reliance on natural gas generation sources that have constrained availability, according to a new study released Thursday by the Clean Energy Buyers Association.
Republicans in Congress have targeted the tax credits for early phase-out as they seek to fulfill President Donald Trump's campaign promises to extend certain tax cuts and repeal clean energy incentives the president has derided as a 'scam.'
The study found that energy-intensive sectors such as iron and steel, chemicals, cement, aluminum and nonferrous metals would be hardest hit.
CEBA's members include many of the technology giants, such as Amazon, Google and Meta, whose data centers and AI models are largely driving the increase in electricity demand.
'They are very concerned that if we don't handle this rising electricity demand in a very, very responsible way, that we're going to see very high electricity price increases both for our own businesses and for our customers,' CEBA CEO Rich Powell said in an interview.
He said many CEBA member companies are in 'growth mode,' pouring huge investments into building new technology, manufacturing and retail sites.
'Anything that destabilizes the electricity system right now, and the economics of the electricity system, could be really difficult for our businesses,' he added.
The study, which NERA Economic Consulting conducted for CEBA, modeled the state-level electricity market outlooks assuming incremental electricity demand from the growth of data centers under two scenarios, with and without the federal investment and production tax incentives. It also provided a breakdown of projected cost increases in certain states.
Seven of the 19 states would see double-digit percentage increases in average household and business electricity prices in the 2026-2032 period, according to the study. Maine would see the highest average increases, projected at 20% for households and 19.3% for businesses.
The increased costs would reduce economic growth, the study states.
'As commercial and industrial activity declines, demand for labor and capital falls, leading to wage losses, declining household income, and shrinking investment,' it states. 'The scale and severity of these impacts vary by state but are significant and far-reaching.'
Utilities have also voiced concerns. The Edison Electric Institute, which represents investor-owned utilities, has come out in favor of keeping the incentives, saying they support Trump's stated goals of keeping energy prices as low as possible and strengthening U.S. competitiveness, national security and energy dominance.
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