What’s Next for Advanced Energy Manufacturing in the United States?

This report analyzes the impact of the One Big Beautiful Bill Act (OBBBA), signed in July 2025, on the advanced energy manufacturing sector in the United States. While the act provides tax certainty and introduces 'full expensing' for capital investments, it creates significant headwinds for solar, wind, and electric vehicle (EV) sectors through the early termination of clean energy tax credits and stricter foreign entity of concern (FEOC) restrictions regarding Chinese supply chains. The report suggests that future investment should prioritize grid equipment, geothermal, nuclear, and next-generation energy technologies where domestic demand continues to exceed capacity.

• The One Big Beautiful Bill Act (OBBBA) introduces 'full expensing,' allowing manufacturers with tax liability to immediately deduct the total cost of research, equipment, and plant investments in the year they occur. While this can increase a project's internal rate of return (IRR) by a low single-digit percentage, it is significantly less impactful than the 45X advanced manufacturing production credit, which can add over 20 percent to the IRR.
• The early phase-out of tech-neutral tax credits (45Y/48E) and the termination of 30D are projected to significantly reduce US demand for clean energy. Solar and wind capacity additions for 2025-2035 are estimated to be 200 to 500 GW lower than pre-OBBBA levels (a 25% to 60% reduction), and light-duty EV adoption is projected to decrease by 27 million to 41 million vehicles by 2035 (a 20% to 34% reduction).
• To maintain eligibility for the 45X credit, manufacturers must adhere to new foreign entity of concern (FEOC) restrictions that limit reliance on Chinese supply chains. This creates a critical need for non-FEOC components; for example, battery manufacturers are encouraged to source cathodes from non-FEOC capacity, which is currently concentrated in South Korea.
• Despite headwinds in some sectors, significant opportunities for domestic investment remain in grid equipment, geothermal, nuclear, and upstream solar and battery components where demand exceeds current US capacity. Specifically, power transformers in the US are in a 30 percent supply deficit, with imports accounting for approximately 80 percent of the current supply.

APA

RMI (2025). What’s Next for Advanced Energy Manufacturing in the United States? https://rmi.org/resources/whats-next-for-advanced-energy-manufacturing-in-the-united-states/

Chicago

RMI. What’s Next for Advanced Energy Manufacturing in the United States? 2025. https://rmi.org/resources/whats-next-for-advanced-energy-manufacturing-in-the-united-states/.

Wikipedia

{{cite report |author=RMI |title=What’s Next for Advanced Energy Manufacturing in the United States? |date=18 September 2025 |url=https://rmi.org/resources/whats-next-for-advanced-energy-manufacturing-in-the-united-states/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2025whats, author = {{RMI}}, title = {{What’s Next for Advanced Energy Manufacturing in the United States?}}, institution = {RMI}, year = {2025}, month = sep, url = {https://rmi.org/resources/whats-next-for-advanced-energy-manufacturing-in-the-united-states/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }