How the Inflation Reduction Act sparked a manufacturing and clean energy boom in the U.S.

Published

3 months ago

August 20, 2024

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Monica Muñoz, top, and Denise Denning place black encapsulation material on solar panels at Elin Energys solar panel manufacturing facility on Thursday, April 25, 2024 in Brookshire.

Brett Coomer | Hearst Newspapers | Getty Images

The Inflation Reduction Act has sparked a manufacturing boom across the U.S., mobilizing tens of billions of dollars of investment, particularly in rural communities in need of economic development.

The future of those investments could hinge on the outcome of the U.S. presidential election. The prospect of a Republican victory has shaken the confidence of some investors who worry the IRA could be weakened or in a worst-case scenario repealed.

Companies have announced $133 billion of investments in clean energy technology and electric vehicle manufacturing since President Joe Biden signed the IRA into law in August 2022, according to data from the Massachusetts Institute of Technology and the Rhodium Group.

Actual manufacturing investment has totaled $89 billion, an increase of 305% compared to the two years prior to the IRA, according to MIT and Rhodium. Overall, the IRA has leveraged half a trillion dollars of investment across the manufacturing, energy and retail sectors, according to the data.

“It is having a transformative effect within the manufacturing sector,” said Trevor Houser, a partner with the Rhodium Group. “The amount of new manufacturing activity that we’re seeing right now is unprecedented in recent history, and is in large part due to new clean energy manufacturing facilities.”

Some 271 manufacturing projects for clean energy tech and electric vehicles have been announced since the IRA passed, which will create more than 100,000 jobs if they are all completed, according to the advocacy group E2, a partner of the National Resources Defense Council. The investments sparked by the IRA have been a boon for rural communities in particular, Houser said.

“Unlike investment in AI and tech and finance, which is clustered in big cities, clean energy investment really is concentrated in rural communities, and is one of the brightest sources of new investment in those areas,” Houser said.

The IRA has also accelerated the deployment of renewable energy, with $108 billion in invested in utility-scale solar and battery storage projects. Investments in solar and battery storage have surged 56% and 130%, respectively, over the past two years, according to the Rhodium data.

“The more mature technologies, so like wind and solar generation, electric vehicles, those have achieved escape velocity,” Houser said. “They will continue to grow no matter what. It’s a question of speed.”

Trump threats to IRA

But the “manufacturing renaissance” is still in its early stages and remains fragile, Houser said. Without the IRA, the resurgence of new factories would not have taken off, said Chris Seiple, vice chairman of Wood Mackenzie’s power and renewables group.

Former President Donald Trump has threatened to dismantle the law as he advocates for more oil, gas and coal production.

“Upon taking office, I will impose an immediate moratorium on all new spending grants and giveaways under the Joe Biden mammoth socialist bills like the so-called Inflation Reduction Act,” Trump told supporters at a May rally in Wisconsin.

“We’re going to terminate his green new scam,” he said. “And we’re going to end this war on American energy — we’re going to drill, baby, drill.”

Clean energy stocks tumbled after President Joe Biden’s disastrous debate performance in late June, as investors worried that Trump and the Republicans are poised to sweep both the White House and Congress were growing more likely.

First Solar, the largest panel manufacturer in the U.S., saw growing constraints on access to capital in the second quarter for early stage solar companies as well as larger players that are trying to build out domestic manufacturing, CEO Mark Widmar told analysts on the company’s July 30 earnings call.

Investors are waiting to make decisions until they have a clearer view of what the policy environment will look like for the solar industry, Widmar said. Utilities and oil companies that were making investments in renewables are now considering a pivot to prioritize fossil fuel projects, he said.

The fear among some investors is that Republicans would will use the reconciliation process, through which bills can be passed with a simple majority, to roll back the IRA in order to finance making Trump’s 2017 tax cuts permanent.

Trump told Reuters Monday he would consider ending the $7,500 tax credits for electric vehicles. Consumers and business have spent $157 billion on zero-emission vehicles since 2022, double the amount before the IRA became law, according to Rhodium.

“Tax credits and tax incentives are not generally a very good thing,” the former president told Reuters in an interview when asked specifically about the EV credits after a campaign even in York, Pennsylvania.

Trump has not specifically called out the tax incentives that have supported the expansion of renewables. The former president’s campaign platform says Republicans will support energy production from all sources. The document backs oil, coal and natural gas as well as nuclear, but does not specifically mention solar or wind power.

Republican districts benefit most

Executives at renewable companies and analysts are betting the investment, production and manufacturing tax credits, which are driving much of the spending on clean energy and technology, would survive even a Republican administration.

A majority of IRA investment in new projects, 85%, has gone to GOP congressional districts, according to E2 data. And Trump’s campaign platform emphasizes expanding domestic manufacturing and bringing supply chains back to the U.S.

The dynamics of the presidential race have also changed since Biden ended his re-election bid, with Vice President Kamala Harris rising to a slight lead over Trump national polling averages as she formally accepts her party’s nomination at the Democratic National Convention in Chicago this week.

“We’ve seen an increase in the number of Republican lawmakers that are embracing the clean energy credits within the IRA as they see the positive impact to their states and communities, which is hard to turn away from,” John Ketchum, CEO of NextEra Energy, which operates the largest portfolio of renewable energy, told analysts on the company’s July 24 earnings call.

“And the tax laws are very difficult to overturn,” Ketchum said. “And we’re very likely to have thin margins in the House and the Senate, particularly in light of some of the recent developments,” he said, hinting at Harris’ rise as the new Democratic candidate.

Indeed, 18 Republican members of Congress warned House Speaker Mike Johnson earlier this month that repealing IRA energy tax credits would be bad for business.

“Prematurely repealing energy tax credits, particularly those which were used to justify investments that already broke ground, would undermine private investments and stop development that is already ongoing,” the Republican lawmakers wrote.

“A full repeal would create a worst-case scenario where we would have spent billions of taxpayer dollars and received next to nothing in return,” they wrote.

John Berger, CEO of rooftop solar installer Sunnova, told analysts on the company’s Aug. 1 earnings call the Trump trade that drove clean energy stocks lower might not have much more room to run.

“Clearly, this is a dead heat now,” Berger said of the presidential race. “I think that the old Trump trade and so forth, I would be very cautious on that.”

Environment

Loren McDonald stops by Quick Charge to discuss EV charging, Paren, and more

Published

10 hours ago

November 14, 2024

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Loren McDonald stops by Quick Charge to discuss EV charging, Paren, and more

Leading electric vehicle analyst, author, and industry thought leaders Loren McDonald and Bill Ferro stop by Quick Charge to discuss EV Adoption’s acquisition by Paren, the “crisis” of EV charging reliability, and the real state of the EV market.

Depending on who you listen, EVs are either driving brands to record growth and are about cross that critical 10% of the overall market nationwide, or the future is bleak, the market is down, and EVs just aren’t selling. What’s really going on? Loren and Bill (probably) have some answers.

Today’s episode is sponsored by BLUETTI, a leading provider of portable power stations, solar generators, and energy storage systems. For a limited time, save up to 52% during BLUETTI’s exclusive Black Friday sale, now through November 28, and be sure to use promo code BLUETTI5OFF for 5% off all power stations site wide. Click here to learn more.

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Chevy EV owners in Texas now get free overnight home charging with Reliant

Published

12 hours ago

November 14, 2024

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Chevy EV owners in Texas now get free overnight home charging with Reliant

Chevy EV Texas Reliant — Chevy Blazer EV (left), Chevy Equinox EV (middle) Chevy Silverado EV (right) (Source: GM)

Chevy EV owners in Texas who have Reliant as their electric utility can now charge for free at night with renewable energy.

Over 150 Chevrolet dealerships across Texas are now offering the Reliant Free Charge Nights plan to new EV buyers. With Free Charge Nights, customers can offset their charging costs by receiving credits for electricity used between 11 pm and 6 am. The plan is powered entirely by renewable energy, thanks to the purchase of renewable energy certificates (RECs).

Rasesh Patel, president of NRG Consumer, says the plan is about making power personal: “We’re excited to help Chevrolet EV drivers offset the cost of charging their vehicle all while having access to a renewable electricity plan.”

This collaboration aims to make EV adoption more appealing by making charging cheaper and greener. GM Energy’s chief revenue officer, Aseem Kapur, emphasized that partnerships like this help build the ecosystem needed to support an all-electric future: “The Reliant Free Charge Nights plan is a great example of how an automaker and an energy company can work together to make EV adoption an easy decision.”

Existing Reliant customers can also sign up for the Free Charge Nights plan. To get started, Chevrolet EV owners need to designate their vehicle on the GM Energy Smart Charging Portal before enrolling in the plan.

Reliant Energy, a subsidiary of NRG Energy, serves over 1.5 million customers in Texas, making it one of the largest electricity providers in the state.

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Texas to get 1 GW AI-powered virtual power plant, enough to power 200,000 homes

Published

14 hours ago

November 13, 2024

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Texas to get 1 GW AI-powered virtual power plant, enough to power 200,000 homes

Texas is about to get a major power boost – a new AI-powered virtual power plant (VPP) delivering capacity equivalent to 200,000 homes during peak demand.

NRG Energy is teaming up with Renew Home to bring nearly 1 gigawatt (GW) of capacity to the Texas grid by 2035, aiming to make it more resilient while helping residents save on energy costs.

The new VPP will rely on hundreds of thousands of smart thermostats and other connected home devices, making use of AI technology provided by Google Cloud. These devices, like Vivint and Nest smart thermostats, will be offered to eligible customers at no cost. By automating HVAC adjustments, they help shift energy use to when electricity is cheaper, cleaner, and less strained.

NRG and Renew Home have big plans for the VPP. Starting in spring 2025, the companies plan to roll out the program across Texas, installing these smart thermostats in homes served by NRG’s retail electricity providers. Eventually, they plan to add home battery storage and EVs to expand the power plant’s capabilities.

Texas has faced record-breaking energy demands, with peak usage hitting 85 GW in 2023. As the state’s population grows and extreme weather becomes more frequent, VPPs like this one could play a key role in stabilizing the grid. VPPs aggregate a lot of small-scale energy resources, from smart thermostats to home batteries, and use them to help balance supply and demand during times of high stress on the grid.

This nearly 1 GW VPP will be one of the largest of its kind in Texas. NRG’s president of consumer operations, Rasesh Patel, calls it a “pivotal step” for improving customer experience while making Texas’ energy infrastructure more sustainable and resilient.

In addition to Renew Home, NRG is working with Google Cloud to maximize the power plant’s effectiveness. Google Cloud’s AI and analytics tools will help predict weather conditions, forecast renewable generation, and optimize energy usage, all of which will help make energy management smoother for both customers and the grid.

Ben Brown, CEO of Renew Home, said:

NRG’s commitment to creating a more resilient and sustainable energy future while also making electricity bills more affordable makes them an ideal partner for co-developing this unique VPP program.

This initiative raises the bar for future-proofing our electricity infrastructure and delivering cost savings to customers.

Read: Chinese solar giant Trina sells its Texas factory a week after it opens

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Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisers to help you every step of the way. Get started here. –trusted affiliate link*

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