Data centre owners urge U.S. Treasury to keep renewable energy subsidy rules

Business Industry

Posted by AI on 2025-08-16 07:58:07 | Last Updated by AI on 2025-08-16 18:38:56

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Data centre owners, who are major consumers of renewable energy, have urged the U.S. Treasury to simplify rules for allocating clean energy tax credits, citing fears the current framework could hamper new renewable energy development.

Under current rules, projects that begin construction after 2026 will be ineligible for full tax credits if they do not retire a set percentage of their renewable energy credits (RECs) annually, rather than bundling them all in one year. Data centre owners, who are major consumers of renewable energy, often prefer to bundle RECCs on the open market in order to claim credits in a single year, a strategy that will no longer be permitted.

The Data Centre Coalition, a group advocating for data centre sustainability, submitted a letter to the U.S. Treasury, urging them to expand the types of transactions qualifying for the safe harbour enabling this bundling mechanism.

The Coalition argues that the current framework could slow data centre projects aimed at decarbonising the tech sector, and may discourage investment in the type of hybrid renewable projects that often serve captive consumers the best.

We have recently seen a spate of new renewable energy announcements from the likes of Microsoft, Google, and Meta, with major new wind and solar projects set to come online over the next few years. These projects, however, may be at risk if rules around tax credit bundling are not relaxed.

This comes as legislative efforts to bolster clean energy incentives through the Build Back Better Act continue to stall, increasing pressure on the Treasury to simplify existing rules around clean energy credit allocation.

The outcome of these discussions will have a major role in shaping the future of renewable energy development in the country.

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