In August 2022 Joe Biden signed the Inflation Reduction Act (IRA) into law. After a long negotiation with moderate democrats such as Joe Manchin of West Virginia, the Biden Administration agreed on and passed a bill that goes down as the largest climate investment in American history. The legislation covers a swath of programs, such as electrification of housing and infrastructure, investment in rural economic development, lowering drug costs, and of most interest to us; expanded investment into clean energy.
Of the $500 Billion in spending outlined in the IRA, an incredible $369 Billion goes towards green energy investment, this influx of available funds into the clean energy sector has totally transformed the landscape of solar energy development in America.
Not only did the IRA provide a slate of generous loans for homeowners, energy developers and entrepreneurs, but it also made massive changes to tax inventive structures. Much of the IRA was also focused on Environmental Justice, requiring projects to meet certain requirements in their employment, location and goals, in order to unlock funds.
We had four of our senior staff share how the bill has changed the work we do and the solar world in general:
Founder and CEO
When I attended the UNFCCC COP 8 in Delhi in 2002, I saw firsthand the power of public/private partnerships to drive climate change reduction. The possibility and excitement I felt was a core driver for the rest of my career and I founded AC Power based on the potential of these partnerships in catalyzing meaningful change and driving sustainability efforts forward. The Inflation Reduction Act and its potential to bring about transformative change in the renewable energy market, clean energy manufacturing, job creation, and community development is palpable. The alignment of federal support with market dynamics can indeed lead to remarkable advancements in sustainable technologies and practices.
AC Power is positioned at the forefront of this energy transition, offering a chance to shape the industry's trajectory and contribute to the larger goal of mitigating climate change. The convergence of public policy, private sector innovation, and a collective commitment to environmental stewardship sets the stage for exciting developments in the years to come. The challenges and opportunities that lie ahead will require innovative thinking, collaboration, and persistence, but our track record suggests that we’re well-equipped to make a significant impact.
Chief of Staff
Over the course of the last year, the Inflation Reduction Act has bolstered AC Power’s mission to reenergize communities – one brownfield at a time. Prior to the IRA, brownfield and landfill projects were at a competitive disadvantage to traditional greenfield solar development. AC Power’s projects relied on volatile state-level incentive programs. While the Northeastern states have a significant head start on incentivizing solar on brownfields, our mission was unattainable to much of the country. With the IRA, AC Power’s geographic reach can expand to new and emerging solar markets. We are no longer as constrained by the boom-bust nature of state-level programs. The IRA has provided a clear market signal that repurposing previously disturbed properties is a core component of the USA’s clean energy transition. That said, the market still seeks more clarity and certainty on how to fully realize the benefits of the law. We are excited to continue our work with stakeholders on unlocking the value of the IRA.
The Inflation Reduction Act has been arguably the single greatest policy tool for the solar energy industry in its history. It has created both short-term opportunities, by breathing life into what was a highly unpredictable and stagnant market environment in mid-2022, and significant long-term opportunities, by laying the runway for a stable and reliable industry for the coming decade. We have been able to develop more solar projects, in more markets, and generate more value for all stakeholders involved in a project: landowners, communities, energy offtakers, installers, and others. While the near-term benefits have been great, I am even more excited to see the long-term effects come to fruition: solar energy as a truly American industry, with a domestic supply chain and the transitioning of historical coal/fossil fuel labor markets to high-paying clean energy jobs.
Finance and Strategy
The IRA has changed “the art of the possible” across renewables markets. At a higher level, the IRA has provisions that benefit everyone from residential homeowners to manufacturing businesses. In our specific field of brownfield solar development, the IRA’s ITC provisions have expanded development options for brownfields and socialized the concept of brownfield solar development.
We’re still waiting to see how the ITC adders shake out, but from my perspective, the adders have served as a catalyst for more conversations about our energy system, and brought more attention to the concerns around our aging energy grid. As we transition to more distributed generation systems, utilities and transmission organizations used to a few large generation plans are struggling to keep up with hundreds of small systems and the associated infrastructure upgrades. The IRA has helped spotlight those issues, bringing needed attention to queue reform.