What It Means for Grid Resilience and Project Planning
Texas generates more wind power than any other state and has emerged as a solar energy powerhouse. But a recent shift in federal policy threatens to slow this clean energy momentum. In July, the U.S. Congress passed the “One Big Beautiful Bill Act” (OBBBA), which rolls back and phases out key tax credits for new wind, solar, and battery projects. This sudden change has rattled developers and led to an unprecedented wave of project cancellations in Texas. For a state that relies on rapid growth in renewables to meet skyrocketing electricity demand, the implications for grid resilience and future project planning are profound.
Why Texas’ Clean Energy Boom Is Slowing
The new law dramatically shortens the timeframe for renewable projects to qualify for federal tax incentives. Developers who planned to tap incentives from the 2022 Inflation Reduction Act now face a much earlier cutoff. As a result, many solar and wind farms that penciled out with credits simply won’t make financial sense to build anymore, according to energy analysts. Even before the bill was signed, uncertainty over potential cuts had a chilling effect. Nearly 8 gigawatts of solar and battery projects were canceled in Texas in just April and May 2025. An industry report found over 9 gigawatts of clean energy projects, including 4 gigawatts of battery storage and 3.5 gigawatts of solar farms, were scrapped in a matter of months — a pace of pullback not seen since early in the pandemic.
Multiple factors are driving this slowdown of Texas clean energy development. The OBBBA not only slashes tax credits but also comes amid renewed tariffs on imported solar panels and batteries, which raise costs for projects heavily reliant on overseas equipment. Policy headwinds and trade uncertainty have led even seasoned developers to tap the brakes on projects not already far along. Smaller developers, who lack big financial buffers, have been particularly quick to cancel or pause plans amid the instability. And while Texas leaders have pushed support for natural gas plants, setting up a $5 billion state fund to finance 10 gigawatts of gas capacity, many of those projects have stalled due to rising costs and regulatory hurdles. The overall policy direction now favors traditional dispatchable generation, leaving renewables in a more precarious position.
Why does this matter? Texas has been the growth engine for U.S. wind and solar, attracting tens of billions in investment and tens of thousands of jobs. A sharp pullback in clean energy investment — the Solar Energy Industries Association warns of $50 billion in lost solar investment in Texas alone from the federal subsidy repeal — doesn’t just threaten corporate balance sheets. It poses risks for jobs, rural incomes, and local tax revenues, since many wind and solar farms are built in rural counties that welcomed the economic boost. Moreover, Texas’ power grid, operated by ERCOT, has leaned on rapid renewable growth to keep up with surging demand. Grid operators project peak demand will jump roughly 70 percent by 2031 as the population grows and industries expand. Slower renewable development means a tighter energy supply cushion just as more power is needed to keep the lights on.
Impacts: Less Capacity, Higher Emissions, Rising Bills
Energy experts have crunched the numbers on the long-term impact of these policy changes. The outlook is sobering. Texas is expected to have 77 gigawatts less power capacity by 2035 than it would have under previous policies. That includes an estimated 54 gigawatts drop in new solar installations and 23 gigawatts less wind capacity over the next decade. In place of some of that lost clean energy, more natural gas plants would fill the gap, adding a projected 2.5 gigawatts of gas generation by 2035. Relying more on fossil fuels means higher greenhouse gas emissions. A Princeton analysis predicts Texas’ carbon emissions will increase under the new law instead of falling.
Consumers are also likely to feel the slowdown in their wallets. With fewer low-cost solar and wind projects feeding the grid, electricity prices are projected to rise. One forecast envisions Texas power rates climbing anywhere from 23 percent to 54 percent by the mid-2030s for homes and businesses. Even on the low end, that translates to a typical household paying about $220 more per year by 2030 and $480 more by 2035 in electricity bills. Another analysis by university researchers projects at least a 5 percent increase in Texas electric bills by 2035 due to the policy shift. In plain terms, Texans could be paying significantly more for power at the very time when extreme weather events, from heat waves to winter freezes, are already straining family budgets and the grid.
Grid reliability concerns loom in the background. Texas has largely avoided blackouts since the 2021 winter storm crisis, thanks in part to the rapid addition of solar farms and batteries that bolstered supply. In fact, ERCOT’s CEO recently noted that more than 9,600 megawatts of new capacity, mostly solar and storage, came online in the past year, helping drive the risk of summer power emergencies down to under 1 percent. But if the pipeline of new projects dries up, that reliability progress could stall or reverse. Older gas and coal plants may need to run harder and longer to meet demand, raising the specter of more frequent breakdowns or fuel supply challenges. And during extreme events, a less diverse energy mix makes the grid more vulnerable. As one analyst put it, Texas is relying on these new generation facilities to meet surging demand… it’s going to be tough if they don’t materialize. Without new investment, even routine growth in demand, projected at around 6 percent a year, could outpace supply, eroding reserve margins that prevent blackouts. In short, a clean energy slowdown not only impacts climate goals and prices, but also the resilience of the grid that millions depend on.
Adapting to a Shifting Landscape: Planning and Resilience Strategies
Despite these challenges, Texas’ energy innovators and utilities are far from powerless to adapt. Experts suggest several strategies to pivot in this new landscape and safeguard both project viability and grid reliability. In the face of shifting incentives, early planning and flexibility will be key. Below are some ways developers and grid planners can respond:
Plan Ahead and Fast-Track Projects: With policy goalposts moving, timing is everything. Developers can accelerate project timelines to qualify for any remaining tax credits before they sunset. Early planning also means securing permits and financing well in advance, insulating projects from policy swings. Some companies are adopting a go now approach — starting construction sooner or phasing projects — to lock in available incentives. By being proactive and ready to go when the green light is on, the industry can still capture value in narrow windows of opportunity.
Retrofit and Repower Existing Assets: When new builds face headwinds, squeezing more capacity out of existing renewable infrastructure is a smart play. Retrofitting older wind turbines with bigger, more efficient blades or updated generators can boost output by around 10 percent or more, adding power to the grid without the hurdles of building a brand-new farm. This kind of repowering extends the life of projects and often qualifies for federal incentives tied to upgrading equipment. Solar developers, too, can retrofit installations with higher-efficiency panels or add battery storage to existing solar farms to increase their value. These upgrades improve economics and help make up for the shortfall in new capacity. Such retrofit strategies allow Texas to get more bang from its existing wind and solar fleet even as fresh investments slow.
Invest in Microgrids and Resilience: Another adaptation is shifting focus from giant centralized projects to smaller, distributed energy solutions. Microgrids, self-contained systems combining local generation and battery storage, offer a path to resilience even if big projects stall. Texas lawmakers recently approved a $1.8 billion program to deploy microgrids at critical facilities statewide. These on-site systems will power places like hospitals, water treatment plants, and emergency services so they can run independently during grid outages. Microgrids can be built relatively fast and scaled community by community, providing reliability insurance against blackouts. By integrating solar panels, batteries, and backup generators on-site, microgrids ensure essential services stay online and take pressure off the main grid during peak demand or emergencies.
In conclusion, Texas’ clean energy slowdown presents real challenges: fewer new wind turbines on the horizon, higher emissions than previously expected, and potential upward pressure on rates. However, it’s not a dead end. By pivoting with smart project planning, retrofitting what we have, and investing in resilience measures like microgrids, developers and utilities can buffer the impacts. These solutions won’t fully replace lost federal support, but they can help keep Texas on track toward a robust, reliable, and cleaner grid.
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