How the Inflation Reduction Act Affects the Renewable Energy Industry
America’s energy industry is in a state of transition, but that transition is accelerating due to the latest renewable energy bill.
In August of 2022, President Biden enacted the Inflation Reduction Act (IRA), which contains provisions encouraging energy providers to pursue renewable options. This article looks at how the latest legislation impacts the renewable energy industry.
In the Inflation Reduction Act, climate change is a major focus. Technically, the IRA does not actually mandate clean electricity or the reduction of greenhouse emissions. But it does offer tax incentives, loans, and grants that make it cheaper to rely on wind and solar energy instead of existing coal and natural gas solutions.
Altogether, this green energy bill pledges to put billions of federal dollars into grants to help companies make the switch to renewable energy. This funding includes:
- $20 billion in loans for new clean vehicle manufacturing facilities
- $2 billion in grants to allow auto manufacturers to transition to clean production
- $10 billion investment tax credit for manufacturers that make clean technology
- $500 million to use the Defense Production Act to accelerate critical components
- Production tax credits to accelerate the production of renewable energy infrastructure
The IRA has additional provisions for consumers, but the policies aimed at manufacturers are expected to put many states on track to significantly reduce their carbon emissions by 2030.
This renewable energy bill is good news for the wind and solar industries. Tax credits will make it easier for manufacturers to create more critical components such as wind turbines and batteries. Wind energy had already been enjoying some basic tax credits, but prior to the IRA, these credits were limited to one through three years.
The IRA designates tax credits for manufacturers that make components critical to the wind industry, which may accelerate offshore wind farm production. That will mean more resources to build the ships necessary for constructing these wind farms, creating more wind sector jobs.Constructable is a professional design-build firm with extensive experience in wind farm construction. Contact us today to get started.
What This Means for the Solar Industry
The solar industry is likewise getting a boost from this renewable energy bill. Tax credits encourage the manufacture of components needed for solar panels, and the Defense Production Act can even accelerate the process of acquiring the materials needed to make these panels.
Soon, it’s likely that solar and wind power will be the most common type of power used by American consumers and businesses. This shift will also create jobs in the clean energy sector, especially for those who manufacture, install, and maintain solar panels that can be used to power homes and commercial structures.
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With the Inflation Reduction Act, climate change will become one of the nation’s biggest priorities. But some challenges still await the solar and wind energy industries.
For one thing, as clean energy use increases, the demand for space will likewise increase. Companies will need land to build wind farms and place solar panels, which means that acreage must transfer from oil and gas companies to clean energy producers.
The IRA allows oil and gas companies to bid on the land, but it’s expected that renewable energy producers will have the upper hand due to increased demand.
We offer various construction services and have helped countless clients save time and money. Contact us today at (832) 844-0500 to learn more about how we can help you make the switch to renewable energy.