A team of Goldman analysts led by Brian Singer reaffirmed his bullish view on U.S. power-sector Green Capex after the IRS recently clarified eligibility rules for solar and wind tax credits under the One Big Beautiful Bill Act (OBBBA). The new "physical work" test replaces the prior 5% capex rule but is not expected to constrain utility-scale solar and onshore wind projects that much.

"While the OBBBA should meaningfully reduce government outlay initially meant to stimulate diverse sources of Green Capex, we continue to see resilient levels of US power sector Green Capex -- we estimate $2.0 trillion in 2023-32," Singer wrote in a note to clients. 

He flagged investment opportunities across the power and water infrastructure supply chain, where the "Reliability Imperative" will continue to funnel capital allocations:

• Meet rising power demand growth -- which our Utilities team expects will continue to grow 2.5% per year through 2030 in the U.S.

• Replace aging infrastructure.

• Enhance resiliency to extreme temperatures/weather events.

Singer outlined the green energy stocks to own:

With power continuing to gain share in Green Capex -- investment towards decarbonization, infrastructure and clean water Sustainable Development Goals -- and our outlook for robust deployment of renewables in the shorter term, natural gas in the medium term and nuclear in the longer term, we continue to see investment opportunities throughout the power and water Reliability supply chain. This includes Buy-rated First Solar, GE Vernova, MasTec, Quanta Services, Xcel Energy, Xylem levered in part to the U.S. market.

Visualizing the companies Goldman believes will see tailwinds from Powering Up America into the clean, digital age...

Singer believes Powering Up America to support data centers will be a mix of green tech power generation, nuclear, plus NatGas... 

As referenced earlier, we believe U.S. generational growth in power demand will not just be supportive for Green Capex (which includes nuclear power) but non-Green Capex as well. As we have previously highlighted, to meet data center power demand growth we continue to expect 60% of generation capacity additions to come from gas-fired plants. Additionally, the Reliability Imperative may drive utilities and regulators to delay coal-fired power plant retirements.

The U.S. is still on track to spend trillions upgrading its power grid and building new generation for data centers, but EVs and some other green tech are losing momentum in President Trump's second term because of OBBBA, pulling total investment below initial IRA-era forecasts.

More in the full Goldman note available to pro subs.