As we all may know, the world has been changing at such a rapid rate. Rising gas prices, the affordable housing crisis, and inequality across the globe, in addition to climate change and the damaging effects it’s causing worldwide from more intense wildfires, flooding, and more. But there’s still hope! This summer, the US government made one of the biggest investments in climate and renewable energy with the historic passage of the Inflation Reduction Act (AKA the IRA) which provides over $300 billion in funding to support climate and clean energy solutions. The Bipartisan Infrastructure Bill (Infrastructure Investment and Jobs Act) is also in the works, rebuilding the United States and providing jobs for Americans throughout the next decade.
The Inflation Reduction Act
Passed this summer, the Inflation Reduction Act is one of the biggest investments that the US government has provided for climate action. The IRA aims to put a down payment on deficit reduction to combat inflation. Some highlights of the act include extending the Affordable Care Act program, investing in clean energy through domestic energy production and manufacturing, and finally, ensuring families making $400,000 or less pay no new taxes.
About the Infrastructure Bill
Another bill that is also taking action on climate and clean energy is the Infrastructure Bill, passed in 2021. The goal of the Infrastructure Bill is to replace lead pipes to provide fresh drinking water, invest in environmental remediation, build better roads and bridges, and produce more jobs during this sustainable transition. Key highlights for the Infrastructure Bill around clean energy include investing in clean power infrastructure and creating networks of electric vehicle chargers.
What does the Inflation Reduction Act mean for solar?
Within the IRA, there are Solar Energy and Energy Storage Provisions. Section 25D of the Inflation Reduction Act states that there will be a solar Investment Tax Credit (ITC) provided to businesses, homeowners, and nonprofits who go solar. This means that property owners will receive a 30% tax credit off the cost of going solar. The current ITC for 2022 is set at 26% and was planned on dropping to 22% in 2023. However, with the passage of the IRA, the ITC will be extended to remain at the IRA’s percentage of 30% until 2033, when the ITC drops to 26%.
If homeowners decided to purchase a solar panel system size of 5 kW, the average price of the solar installation would cost $14,000. With the 30% ITC, homeowners save $4,200 off the cost of going solar. Investing in solar panels would not only benefit homeowners and residents but will improve the quality of life in the environment they reside in.
Additionally, the ITC benefits nonprofits as well. Nonprofits have not been able to utilize the solar Investment Tax Credit, and have had to pay for their solar system outright. With the direct payment option available within the IRA, nonprofits are now able to access the 30% credit via direct payment, making it easier for nonprofits to go solar. If you know any nonprofits in your community that are interested in going solar, RE-volv helps nonprofits go solar for $0 down!
The IRA also includes rebates for Residential Efficiency and Electrification. It provides $4.3 billion to the State Energy Offices to produce home energy upgrades through the Home Owner Managing Energy Savings (HOMES) rebate program. If the project saves at least 35%, rebates can be provided from up to $8,000, depending on the income of the family.
In Superfund and brownfield sites, the IRA bill will invest $21 billion to remediate environmental harms. The funds will also create good-paying union jobs that will support the cleanup of polluted and abandoned sites. After this is complete, the jobs will transition to clean and renewable entries to reverse the harm done to these communities. Homeowners in these areas can also see direct incentives from this bill with reduced property taxes, waived permitting fees, or direct payments as a way to mitigate additional costs in solar development. These additions make it more attainable for homeowners to go solar.
How much money is the government willing to invest overall?
According to the Senate Democrats’ summary on the IRA, approximately $300 billion in Deficit Reduction and $369 billion in Energy Security and Climate Change programs will be invested over the next ten years. With this financial commitment, renewable energy is going to be subsidized, allowing homeowners, businesses, and nonprofits to better afford solar panels for their homes and businesses.
How does the Infrastructure Bill affect solar?
Part of the Infrastructure Bill includes an Energy Efficiency Revolving Loan Fund Capitalization Grant Program, where states would give loans and grants for energy audits, upgrades, and retrofitting for residential and commercial properties. Through these projects, power will run more efficiently through the existing infrastructure. The current funding amount for this program is $250 million, and the opening date to apply for these funds will begin in the 4th quarter of 2022.
Entities that qualify for the Energy Efficient Transformer Rebate are commercial building owners, multifamily building owners, utilities, industrial, or manufacturing facility owners. Although this may seem like it does not apply to solar, it surely has an indirect effect that makes the energy process more efficient. A transformer can change the alternating voltage, increase or decrease the voltage, providing the right output voltage depending on the needs.
Think about it from this perspective - replacing an energy inefficient transformer with an energy-efficient transformer means the transmission of electricity will flow more smoothly, allowing excess renewable energy to flow back to the grid easier. As this happens, it will help provide more credits from net metering, which means more energy savings! The funding amount for the rebate is $10 million, and the applications have already opened starting in the third quarter of 2022.
A Promising Future
The past couple of years have been difficult for many of us, but with the passage of the IRA and Infrastructure Bill, we’re finally seeing the investment into climate and renewable energies that is needed to create change. It is estimated that the Infrastructure Bill will add on average 1.5 million jobs per year for the next 10 years! We will also see $65 billion invested in the clean energy grid and transmission, the largest of its kind in American history. Although our country needs more than just legislation to improve our conditions, the Inflation Reduction Act and Bipartisan Infrastructure Bill display a promising future filled with positivity, clean energy, water, air, and an overall improvement in the caretaking of the Earth!
