New budget law is quickly changing the energy economy
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Fresh data points reveal how the new budget law's looming phaseout of renewable and EV subsidies is quickly shaking up markets for those sectors.
Why it matters: The energy world is awash in predictions about the law's future effects — but facts on the ground are now changing, too.
Driving the news: "EV incentives soared in July, as automakers and dealers worked to move inventory prior to the decline in government support," per Kelley Blue Book analysis.
- The average package soared to 17.5% of the average EV transaction price, up 40% year-over-year, as the industry braces for credit access to vanish on Oct. 1.
- Initial estimates show July EV sales were the second-highest monthly ever, up 20% YOY, as a predicted sales boost ahead of the deadline is materializing.
State of play: On the renewable front, a separate new analysis finds that prices in U.S. power purchase agreements (PPAs) are already up 4% since the law's passage. PPAs are often used in the sector to speed project development and financing.
- The law creates new hurdles for wind and solar. To tap credits, projects must start construction by early July 2026 or start operating by the end of 2027.
- The law also creates other new restrictions, and all told, the list of eligible projects is shrinking, per the study from clean energy marketplace company LevelTen Energy.
- There's also fresh uncertainty. Treasury's implementation plans are looming as the agency is under White House pressure to take a hard line that limits access.
Friction point: The 4% rise is "the clearest signal yet that the market has already begun to reprice in light of these new risks and headwinds," the report states.
What's next: Even higher costs for the kinds of deals that often help large companies pursue sustainability goals.
- "Buyers that move now can still access projects priced well below what's expected in the quarters ahead," the report states.
The bottom line: Love it or hate it, the new law is already reshaping U.S. energy and transport economics just a month after President Trump signed it — and it's still early days.
Disclosure: Kelley Blue Book is owned by Cox Automotive, a subsidiary of Cox Enterprises, which is the majority owner of Axios.
