The US Senate has passed the sweeping reconciliation package known as the “One Big, Beautiful Bill”, with significant implications for the country’s energy sector. The bill extends federal tax credits for hydropower and other baseload energy sources, while scaling back support for wind and solar projects.
The legislation, passed by a 51–50 vote with Vice President J.D. Vance casting the tie-breaker, alters the clean energy credit structure established in earlier climate legislation. Under the new framework, tax incentives for hydropower, nuclear, geothermal, and energy storage will remain in place until 2033, with a gradual phaseout through 2036. In contrast, wind and solar tax credits are set to begin phasing out in 2028.
In response to the bill’s passage, National Hydropower Association (NHA) President and CEO Malcolm Woolf issued a statement praising the Senate’s action.
“The Senate passed ‘One Big, Beautiful Bill’ recognizes the essential role hydropower plays in delivering around-the-clock, baseload electricity that keeps the grid reliable, clean, and affordable,” Woolf said.
“With approximately 40% of the existing U.S. hydropower fleet facing license expiration, federal tax credits are critical toward repowering the existing fleet while also enabling new hydropower development at existing dam sites, new pumped storage, and Marine Energy,” he continued. “We thank our many Senate champions for fighting to preserve and expand the nation’s hydropower fleet, which provides electricity to roughly 25 million American homes and businesses every day.”
The hydropower sector is currently facing a major challenge as a large portion of the U.S. fleet approaches license renewal. The Federal Energy Regulatory Commission (FERC) requires facilities to undergo rigorous environmental and technical reviews during relicensing, which often includes new requirements such as fish passage upgrades, modernized turbines, and dam safety improvements. These investments can be costly, and without federal support, many operators may be forced to retire their facilities rather than reinvest.
In the past decade, more than 60 hydropower operators have surrendered their licenses, citing economic infeasibility. Industry leaders argue that targeted tax incentives are essential to maintain the existing fleet and support additional development at non-powered dams and through new technologies such as marine and pumped storage hydropower.
The reconciliation bill’s passage follows months of negotiation, with Republican lawmakers seeking to narrow the scope of clean energy subsidies while prioritizing baseload and dispatchable sources. Hydropower advocates have long argued that their sector, which provides consistent generation regardless of weather conditions, should receive equal treatment with nuclear and fossil fuel plants.
Hydropower currently provides about 6 to 7% of US electricity but plays an outsized role in grid stability due to its reliability and flexibility. Industry supporters say the extended tax credits will allow utilities and operators to make long-term investments in modernisation, helping meet national clean energy and reliability goals.
