Solar Policy Crackdown Threatens to Derail AI’s Power-Hungry Expansion—Data Centers Sound Alarm

Data centers are ringing the alarm bells: stricter solar regulations could slam the brakes on AI's energy demands. The industry's growth—built on cheap, abundant power—faces a reckoning as policymakers tighten green-energy rules.

Power play or power fail?

AI's insatiable appetite for electricity relies heavily on solar-backed data centers. But with new restrictions looming, the math gets ugly: less renewable energy means higher costs, slower deployments, and a potential bottleneck for the next generation of machine-learning models.

Wall Street's take? 'Innovation always finds a loophole—or a tax haven.' Meanwhile, data center operators scramble to lobby for exemptions before their growth projections hit a wall.

The Trump administration sets up stricter regulations for wind and solar energy subsidies 

Last month, US President Donald Trump signed an executive order demanding stricter regulatory measures for renewable energy tax credits. This also applied to AI projects, altering their initial construction definition.

Industry executives mentioned that they had strictly adhered to the regulations set for the wind and solar energy subsidies for the past decade. 

Meanwhile, apart from data center owners, Clean Energy Associates, a North America-based firm highly reputed for reliable data and analysis in the solar and energy storage projects, also cautioned that if the Trump administration’s stricter regulations take effect, then the US should be ready to face a 60-gigawatt loss of solar power development come 2030.

Additionally, these stricter regulations will affect the United States’ economic status. To illustrate this, reliable research reveals that the data center sector alone contributes roughly $3.5 trillion to the country’s total gross domestic product from 2017 to 2023. In addition, it offers job opportunities to around 600,000 individuals, per DCC’s analysis. 

The fate of these regulations will be determined on August 18, the deadline for the Treasury Department to release the final updated regulations for wind and solar energy subsidies.

Trump refers to wind and solar energy as “unreliable” forms of energy 

On Friday, August 15, the US Treasury Department unveiled stricter regulations for solar and wind projects that required full physical attention from developers running big solar and wind projects, not the amount of funds they had invested in the project.

Since Trump took office in January, his goal has been to reduce the industry’s dependence on wind and solar energy. Based on his argument, these energy sources are unreliable, expensive, and are connected to China’s supply chains. Hence, with these new regulations in place, Trump asserts that it will limit who can get tax credits. However, unless a massive part of a facility is constructed, this limitation will not apply.

To be eligible for a 30% tax credit and bonuses to increase one’s subsidy, the One Big Beautiful Bill Act, which Trump recently signed into law, highlights that projects must be initiated by July 2026 or start operating by the end of 2027. 

Furthermore, these new regulations demand utility-scale projects to be highly centered on physical work to qualify for the credits for projects set to start construction on or immediately after September 2. In the meantime, the sector has four years to claim the subsidies.

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