In H1 2024, IRA’s impact becomes more evident with increased investment due to guidance and incentives.

The Impact of the Inflation Reduction Act on the clean energy Industry


The Inflation Reduction Act (IRA) is celebrating its second anniversary in August, and its potential effects on the clean energy sector are becoming clearer with each passing day. As federal guidance continues to be issued on the law’s provisions, private investments in clean energy are on the rise, fueled by tax incentives provided by the IRA.

Private Investment and clean energy Projects

According to E2, a business group, 41 major clean energy projects have been announced this year, attracting a total of $12.6 billion in private investment. The IRS has also released final guidance for various aspects of the IRA, such as wage requirements, apprenticeships, and tax credit transferability.

Industry Concerns and Pending Guidance

Despite the progress made, final guidance is still pending for the 45V hydrogen tax credit. Lesley Hunter from the American Council on Renewable Energy highlighted the need for clarity on qualifying projects to address the uncertainties created by previous proposals.

Market Developments

The finalized tax credit transferability guidance, issued in April, has led to an increase in clean energy tax credit transactions. Market reports estimate that transactions may exceed $7 billion to $9 billion this year. The IRA is expected to provide long-term stimulus to the clean energy sector.

Trade Policy Disagreements

Debates within the industry have emerged regarding trade policies related to clean energy manufacturing and generation. The solar industry, in particular, is divided over a petition to impose duties on imported solar cells from select countries, with concerns about the impact of the IRA on global trade.

Interest Rates and Economic Impact

Interest rates have remained high, affecting industry expectations for cuts. Higher capital costs have driven companies to focus on revenue generation and improving their return on investments. clean energy developers are adapting to transmission challenges by connecting new generation directly to industrial facilities.

Future Outlook and Funding Opportunities

As the IRA enters its third year, the focus is shifting towards the disbursement of funds to states, non-profit entities, and municipalities. Programs like the Greenhouse Gas Reduction Fund and Climate Pollution Reduction Grants are set to play a significant role in advancing clean energy initiatives. The states are expected to take a central role in implementing the IRA, regardless of the outcome of the upcoming presidential election.

Read More of this Story at – 2024-07-03 20:12:00

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