The Inflation Reduction Act is Working for Solar – and the Economy

EDPR NA Energy Insight

The Inflation Reduction Act is Working for Solar – and the Economy

September 16, 2024

The Inflation Reduction Act (IRA) was designed to boost economic growth while addressing climate change. How’s it working for renewable energy so far?

The IRA is not only the most significant climate legislation in U.S. history, it’s crucial for the U.S. economy. The passage of this pivotal legislation has already had an immediate impact on the U.S. solar industry and the economy as a whole. In the two years since it was enacted, the team at EDP Renewables North America, our customers, and – more importantly – the communities we serve - have seen its benefits on the ground, and they have already exceeded expectations.

Unprecedented Growth in Solar Installations and Manufacturing

Solar is in a period of record growth in the United States. There is enough solar installed in the U.S. today to power 32.5 million households. More than 25% of these installations have come online since the IRA became law.¹ In Q1 2024 it spiked to the second highest quarter on record, eclipsing every other previous quarter except Q4 2023.²

American solar and storage manufacturing is also booming. A record-setting 11 gigawatts (GW) of new solar module manufacturing capacity came online in the United States during Q1 2024, the largest quarter of solar manufacturing growth in American history.3 In addition, massive investment in battery storage manufacturing is underway, and these manufacturing facilities will ensure that the solar and storage industries have access to reliable, domestic supply for future growth. Developing a robust, reliable U.S. supply base for solar development is critical to preventing further supply chain disruptions while improving the cost-effectiveness of clean energy projects. In the next half-decade, according to SEIA and Wood-Mackenzie, the long-term tax incentives and manufacturing provisions in the IRA could boost expected solar deployment by 46% compared to pre-IRA projections could boost expected solar deployment by 46% compared to pre-IRA projections.

Creating Jobs in Energy Communities

Clean energy manufacturing investment means jobs -- thousands of jobs. By 2033, SEIA expects America’s solar manufacturing workforce will grow to 100,000 workers. The economic and social ripple effects of those jobs – and thousands of other jobs for people building batteries, wind and other cleantech products – are only now beginning to reverberate through local communities.

Anticipating the growth in clean energy jobs, EDPR NA opened the doors of its first Technician Training Facility in Bloomington, Illinois, where new solar and wind technicians gain the expertise necessary for successful careers in renewable energy. The training hub sets a new standard for building the knowledge and skillsets necessary to be an effective front-line clean energy worker and is a model for others to follow.

As the U.S. transitions away from coal and fossil fuels to renewable sources of energy, the communities that have powered the economy for decades cannot be left behind. The IRA’s energy communities provision aims to revitalize communities that have historically hosted oil, coal and gas facilities.

Since the IRA passed, 75% of private investments in clean energy have flowed to counties with lower than median household incomes.⁴ Spurred by provisions in the IRA, investments in energy communities -- including areas with closed coal mines or coal-fired power plants and communities higher than average unemployment -- has doubled, according to Treasury Department analysis.

EDPR NA has generated more than 10,200 megawatts of renewable energy across North America to date, enough to power more than 2.7 million homes. The ancillary effects of these projects go far beyond providing affordable, clean energy for millions of people. EDPR-NA projects provide good-paying jobs that support local families, provide long-term guaranteed income for farmers and landowners, build a strong local tax base for schools and public infrastructure, and support local business.

Decarbonizing the U.S. Power Sector

If the U.S. is to meet the goal of a net zero carbon emissions economy by 2050, decarbonizing power generation is crucial. The IRA encourages the transition to renewables by the utility sector, and the benefits are already being realized in the form of reduced carbon emissions.

U.S. energy-related CO2 emissions decreased by 3% in 2023, the equivalent of about 134 million metric tons (Mmt). More than 80% of the emissions reductions occurred in the electric power sector, largely through decreased coal-fired electricity generation, which was displaced by increased generation from solar and natural gas, according to the US Energy Information Administration.

In 2023, carbon emissions from the US electric power sector decreased 7 percent, fueled by the transition to both solar power and natural gas.⁵

When power plants burn coal, greenhouse gas emissions and local air pollution make nearby residents sick, increase health care costs, and reduce productivity, with negative consequences for the whole economy.⁶ Every ton of avoided emissions diminishes those negative effects – and reduces the compounding threat of worsening heat waves, hurricanes, and global dislocation.

In the two years since becoming law, the IRA has spurred economic investment where it’s needed most, established a strong US manufacturing base for clean energy, created thousands of jobs, and slashed greenhouse gas emissions. While there is still much progress to be made, it’s clear that the IRA is a cornerstone climate policy that deserves protection and expansion.

At EDPR NA, we're excited about the IRA, because we're also driving and contributing to its policy goals, generating jobs, sourcing construction and manufacturing materials domestically, developing in new geographies, and decarbonizing the energy sector. We look forward to working with industry partners and local communities across the US, united in accelerating the clean energy transition.