The Inflation Reduction Act (IRA) assists the solar and storage industry in creating jobs and fast-tracking clean energy by 2030. After one year, impressive solar and storage growth made progress on IRA goals.
Addressing climate change has never been more pertinent than this summer of extreme weather that has been felt around the world. July was the hottest month ever recorded on Earth, co-occurring with extreme rain and floods that plundered the Northeast in a “1-In-1000-Year Weather Event,” and Canadian wildfires that started in June. Wildfire smoke blanketed the U.S. in June and July from the vast Canadian wildfires, which had spread outside of normal wildfire territories to the country’s eastern provinces. This month in Maui, devastating wildfires spread across the Hawaiian Island and killed at least 115 people, with thousands of people still missing. These extreme weather patterns are a symptom of climate change driven by fossil fuel consumption.
The transition to clean energy such as solar is important to reduce greenhouse gas emissions and pollution that drive climate change. Last year, the federal government made historic investments in clean energy when President Joe Biden signed the Inflation Reduction Act (IRA) into law on August 16, 2022. The federal investments in domestic energy production and manufacturing aim to create a clean energy economy, lower energy costs, and reduce carbon emissions by 40% by 2030.
The IRA lowers energy costs through tax credits for families and solar equipment manufacturers, which supports domestic production of solar technologies and provides Americans with clean energy jobs. The U.S. Department of Energy reports updated modeling that shows how the IRA will save families up to $38 billion by 2030. The 30% tax credit on residential solar installations will enable 7.5 million more families to install solar systems on their homes, saving them $9,000 over the life of the system. However, President Biden’s climate goals are estimated to save every family an average of $500 per year on ever-increasing utility energy costs. Members of American families can also work in clean energy jobs as industry employment continues to expand over the next ten years.
Industry employment has already reached 263,000 jobs today and is expected to double to almost 478,000 by 2033. Research shows that the IRA creates at least 137,000 of those jobs when modeled against a no-IRA scenario. The IRA’s manufacturing tax credits for solar panels, inverters, and racking have increased jobs over the last year with the 51 production facilities that have been announced. The domestic production of solar materials will employ over 100,000 workers while streamlining the supply chain. Energy storage projects are also eligible for tax credits and do not need to be connected to solar projects, which is important for grid infrastructure and reliability as we transition to renewable energy.
Impressive solar and storage industry growth fast-tracks the deployment of the estimated 950 million solar panels and 2,300 grid-scale battery plants anticipated as part of the IRA’s clean energy economy that will power homes, businesses, and communities with clean energy by 2030. Over the last year, $100 billion of private sector investments have been announced by U.S. solar and storage companies. In a multimodel analysis, researchers found that the IRA leads to exponential increases in clean energy. Across all nine scenarios, they found that solar and wind growth rates range between 10 to 99 gigawatts (GW) per year, with an average rate of 58 GW per year, doubling the no-IRA scenario averaging 27 GW per year. In addition to accelerating clean energy deployment, the IRA is also jumpstarting investment in domestic manufacturing. 155 GW of new solar manufacturing capacity has already been announced since the IRA passed, including:
85 GW of solar module capacity
43 GW of solar cells
20 GW of silicon ingots and wafers
7 GW of inverter capacity
The combination of the IRA and Bipartisan Infrastructure Law has 10 times more impact on pro-climate policies than any past legislation. Supported by federal tax credits, the IRA’s clean energy economy will reduce greenhouse gas emissions from fossil fuels by a billion metric tons. A rapid and equitable transition to clean energy will benefit the communities most harmed by the use of fossil fuels. Pollution from fossil fuels disproportionately impacts Black, Brown, Indigenous, and poor communities, and is associated with asthma, birth complications, cancer, respiratory disease, heart conditions, and premature mortality.
Climate mitigation policies and the transition to clean energy are imperative for the health of Americans, as demonstrated by the extreme weather events of this summer. The IRA has empowered American solar and storage companies to make investments necessary for rapid progress toward President Biden’s climate goals. Protecting the IRA is critical for sustaining our progress so we can limit the most severe impacts of climate change while creating opportunities for the next generation of American businesses, entrepreneurs, and workers.