US Policy Uncertainty Poses Risks to Clean Energy Investment

US Policy Uncertainty Likely to Disrupt Investment – Crux
By Jonathan Touriño Jacobo
June 5, 2025

Policy uncertainty in the United States, along with resulting financial volatility, is likely to hinder investments in clean energy, according to a recent report by Crux, a sustainable finance company. The report indicates that potential policy changes from the White House could jeopardize capital access for developers and manufacturers in the clean energy sector.

The report was released following the House of Representatives’ vote on the US tax Reconciliation Bill, which is currently under Senate discussion. The bill, in its present form, could abruptly end tax credits that have supported US clean energy industries. “The near-term uncertainty may lead some developers to encounter higher capital costs, limited capital availability, or increased equity requirements while seeking project financing,” stated Crux.

One significant measure that would impact the clean energy sector is a provision that would restrict “prohibited foreign entities” from accessing tax credits under the Inflation Reduction Act, as well as potentially limit the procurement of materials from certain foreign entities. According to Crux, investor opinions are divided on whether these provisions would influence their investment decisions regarding companies associated with foreign entities of concern (FEOC). Just over half (54.5%) of investors indicated that their willingness to invest in a project would remain unchanged, while 45.5% said it would be affected.

“As we face unprecedented energy demands and evolving geopolitics, the efficiency and transparency of capital markets will be crucial for America’s ability to build future energy infrastructure,” said Alfred Johnson, CEO and co-founder of Crux. “This report sheds light on financing trends that have historically been opaque, equipping project developers and manufacturers with the insights necessary to create competitive financing packages.”

Additionally, the House bill proposes an earlier termination of several tax credits than initially expected. For instance, the termination of Section 25D, a residential energy tax credit, has been moved up to the end of this year instead of the anticipated end of 2034. Other tax credits, such as advanced manufacturing production credits (Section 45X) and investment and production tax credits (ITC/PTC), may also face early termination.

“The interconnected nature of clean energy financing means that changes in one area can have ripple effects throughout the entire market,” Johnson explained. “For example, our data indicates that tax credit bridge lending—allowing projects to access the value of future tax credits—has become more accessible, driven by advance rates and the presence of committed investment-grade tax credit buyers. If tax credit policies change, understanding the dynamics of the debt market becomes even more critical for project success.”

One of the key findings of Crux’s report is that capital is most readily available for solar PV and energy storage projects. Almost every investor across all stages of the development process expressed a willingness to invest in solar. Moreover, construction or term lending for projects with contracted offtake typically enjoys greater capital availability and lower costs of capital. Over 70% of lenders reported their readiness to invest in fully contracted projects. However, Crux’s data shows that a smaller subset of lenders is open to financing merchant or partially contracted projects.

In conclusion, the outlook for clean energy financing in US projects and manufacturing remains strong, with increasing standardization, growing liquidity, and widespread policy support. Despite ongoing trade policy issues, tax administration challenges, and economic volatility, Crux anticipates a solid foundation for long-term capital formation as the market evolves beyond established solar, wind, and energy storage technologies, enabling smaller developers to access capital more fluidly.