How Does the One Big Beautiful Bill Impact the Grid?
Looks like nuclear, natural gas and batteries are the big winners.
The passage of the One Big Beautiful Bill (OBBB) by the U.S. Senate in July 2025 marks a pivotal shift in U.S. energy policy, with significant implications for the national power grid, energy prices, and investment opportunities. This comprehensive budget reconciliation bill, championed by the Trump administration, prioritizes traditional energy sources, such as natural gas and nuclear energy, while scaling back incentives for renewable energy.
Drawing on insights from FTI Strategic Communications and other sources, this article explores how the OBBB reshapes the grid, its impact on energy prices, and what investors should watch for in this evolving landscape.
I have reached out to Steve Everly, Managing Director at FTI Consulting, to discuss this significant topic on a podcast.
The OBBB’s Core Energy Provisions
The OBBB fundamentally alters the energy landscape by reallocating resources and reshaping tax policies to favor fossil fuels and select clean technologies. Key provisions include:
Rollback of Renewable Energy Tax Credits: The bill accelerates the phase-out of the Inflation Reduction Act’s (IRA) clean energy tax credits, particularly for wind and solar projects. Projects must begin construction by mid-2026 to qualify, with credits terminating entirely by the end of 2027. Stricter “Foreign Entity of Concern” (FEOC) rules further complicate eligibility by restricting projects with components from countries like China.
Support for Natural Gas and Nuclear: The OBBB streamlines permitting for oil, gas, and coal projects, opening federal lands for expanded leasing. It also cements nuclear energy as a cornerstone of the future energy mix, with provisions for advanced nuclear and geothermal projects to access tax credits until 2036.
Battery Storage Boost: Surprisingly, the Senate version of the bill extends production and investment tax credits for battery storage projects until 2036, recognizing their role in grid reliability.
Tariff and Trade Impacts: The bill imposes tariffs on energy imports and restricts Chinese-manufactured components in the U.S. grid, aiming to bolster domestic manufacturing but raising costs for renewable projects reliant on global supply chains.
According to FTI Strategic Communications, these changes drive a market shift toward natural gas and battery storage while diminishing the near-term growth of wind and solar. The bill’s “energy dominance” framework prioritizes reliable, dispatchable power to meet soaring electricity demand from AI data centers, electrification, and industrial reshoring.
Impact on the Grid
The OBBB’s policies will reshape the composition and operation of the U.S. power grid in several ways:
Increased Reliance on Natural Gas: With renewable tax credits curtailed, natural gas is poised to fill the gap as a quick-to-deploy, dispatchable resource. However, supply chain constraints, such as turbine shortages with wait times of five to seven years, may limit near-term capacity additions. This could strain the grid during peak demand periods, especially as AI-driven electricity needs are projected to exceed 100 gigawatts in the coming years.
Battery Storage Expansion: The extension of tax credits for battery storage is a bright spot for grid reliability. Batteries can store excess power and provide dispatchable energy, mitigating the intermittency of renewables and supporting gas-fired plants. This could help stabilize the grid, particularly in regions with high demand for data centers.
Slower Renewable Buildout: The Rhodium Group estimates that the OBBB could reduce new clean energy capacity by 57% to 72% by 2035 compared to IRA scenarios. This slowdown may exacerbate power shortages, as renewables like solar and wind are the cheapest and fastest to deploy. Grid constraints could worsen in regions dependent on renewable growth.
Nuclear and Geothermal as Long-Term Pillars: The bill’s support for nuclear and geothermal projects signals a long-term strategy for baseload power. However, high costs and lengthy development timelines mean these technologies won’t significantly impact the grid before 2030.
Permitting Challenges: Despite the bill’s focus on energy dominance, it leaves permitting reform unresolved. Streamlined processes for transmission, nuclear, and gas infrastructure are critical to meeting demand, but delays could bottleneck grid expansion.
FTI Strategic Communications notes that while the bill aims to enhance grid reliability through gas and batteries, the reduced deployment of renewables could create vulnerabilities, particularly as demand surges.
Impact on Energy Prices
The OBBB’s shift away from renewables is likely to increase energy prices for consumers and businesses:
Higher Electricity Costs: Energy Innovation projects that the bill could add $170 billion to household energy bills from 2025 to 2034 due to reduced clean energy capacity and reliance on costlier gas-fired power. Enverus estimates that a full repeal of tax credits could lead to 25% higher power prices, passed directly to consumers. On this point from Enverus, I question the math as nobody is calculating the cost of printing money to pay for the “renewable wind and solar.”
Tariff-Driven Cost Increases: Tariffs on energy imports, including a 10% rate on Canadian oil and gas, could raise natural gas prices by 5 to 10 cents per million British thermal units (mmBtu), according to Wood Mackenzie. Tariffs on Chinese solar components will further increase costs for renewable projects, potentially raising electricity rates.
Regional Variations: Regions with strong renewable portfolios, like California and Texas, may face higher capacity prices as project pipelines shrink. In contrast, areas with abundant gas resources could see more stable prices, though long-term supply constraints may offset this.
Battery Storage as a Mitigator: Expanded battery deployment could help manage peak demand, potentially lowering wholesale price spikes. However, upfront costs for storage projects may keep prices elevated in the near term.
FTI Strategic Communications highlights that the bill’s focus on gas and batteries may stabilize prices in the short term, but risks long-term cost increases as renewable economies of scale diminish.
What Investors Should Look For
The OBBB creates a mixed bag of risks and opportunities for energy investors. Here are key areas to monitor:
Fossil Fuel Producers: Companies like ExxonMobil (XOM) and Chevron (CVX) stand to gain from expanded oil and gas leasing and streamlined permitting. Energy ETFs like XLE could capture upside in this sector. Investors should watch for regulatory clarity on leasing and tariff impacts on domestic production costs.
Look for independent oil and gas producers in the United States that offer investments with tax advantages. We evaluate deals and collaborate with numerous exceptional operators.
Battery Storage and Hybrid Systems: Firms specializing in battery storage, such as AES Corp (AES), are well-positioned to benefit from extended tax credits. Hybrid energy systems combining gas and storage could attract capital as utilities prioritize reliability. Monitor project announcements and interconnection queue data for storage growth.
Nuclear and Geothermal Developers: Companies involved in advanced nuclear and geothermal, like NuScale Power, could see long-term gains as tax credits extend to 2036. However, high capital costs and regulatory hurdles warrant caution. Track permitting reforms and federal loan guarantees for signals of accelerated deployment.
Renewable Energy Risks: Wind and solar developers, such as First Solar (FSLR), face headwinds from reduced tax credits and FEOC restrictions. Investors may consider hedging with put options on renewable stocks or focusing on firms with safe-harbor projects. Watch for safe-harboring activity and Senate amendments that could soften the bill’s impact.
Grid Infrastructure and Utilities: Utilities like NextEra Energy (NEE) with diversified portfolios (gas, storage, and renewables) are likely to navigate the transition effectively. Infrastructure firms supporting grid reliability projects, backed by $1 billion in OBBB loan guarantees, could also see upside. Monitor federal funding disbursements and regional grid investment plans.
Market and Policy Signals: Investors should track state-level Renewable Portfolio Standards (RPS), which drive 50% or higher clean energy goals in 16 states, and corporate demand from tech giants for 24/7 clean power. These forces may counter federal policy shifts. Additionally, watch for Senate amendments or legal challenges to the bill’s funding clawbacks, which could alter its trajectory.
FTI Strategic Communications advises investors to focus on companies with strong balance sheets and diversified energy portfolios, as they are better equipped to weather policy uncertainty and capitalize on gas and storage opportunities.
Critical Considerations
While the OBBB aims to bolster energy dominance, it risks ceding renewable innovation to competitors like China, which dominates global solar and battery supply chains. The bill’s rollback of IRA incentives could shrink U.S. clean energy jobs by 840,000 by 2030 and reduce GDP by $1.1 trillion through 2034, according to Energy Innovation.
Moreover, the bill’s reliance on natural gas assumes stable supply chains, but turbine shortages and permitting delays could undermine this strategy. The emphasis on nuclear and geothermal is promising but won’t deliver immediate grid relief. Investors and policymakers should critically examine whether prioritizing short-term fossil fuel gains sacrifices long-term economic and environmental resilience.
Conclusion
The One Big Beautiful Bill reshapes the U.S. power grid by prioritizing natural gas, battery storage, and nuclear energy, while curtailing the growth of renewable energy. This shift will likely increase energy prices, strain grid capacity in the near term, and create both risks and opportunities for investors. Fossil fuel producers, battery storage firms, and diversified utilities are poised to benefit, but renewable developers face significant headwinds. Investors should closely monitor safe-harbor activity, state policies, and corporate demand for clean power to navigate this transition effectively.
Additionally, consider resources like Reese Energy Consulting for all your Natural Gas sourcing needs, as well as where to obtain natural gas generators for data centers or backups.
As the U.S. grapples with soaring electricity demand, the OBBB’s success hinges on resolving permitting bottlenecks and balancing short-term reliability with long-term sustainability. For now, the grid—and the wallets of American consumers—will feel the weight of this seismic policy shift.
Sources: FTI Strategic Communications, Atlantic Council, Canary Media, Energy Innovation, Wood Mackenzie, Reuters, and others as cited. For more details, visit
It a good idea to open up the grid to different power sources, including nuclear. What I didn't see in the bill was any measure to repair and replace failing infrastructure. We don't make our own power transformers anymore, that's a china thing. We need to build our own devices again.
The BBB is just another example of poor energy policies continuing to be implemented. I mean battery backup or storage, come on man! A completely redundant system with extraordinary expenses. It makes no sense. 36 trillion in debt, should mean absolutely no subsidies for any base load electricity production. Including nuclear and geothermal. Btw, just how many geothermal plants are currently operating in North America and what is their output and maximum capacity. Very disappointing all this pork was pushed thru on the big Fat Pork bill of 2025.