On August 16, 2022, President Biden signed into law the Inflation Reduction Act (IRA), the largest-ever investment in clean energy and climate action. Two years later, the landmark legislation has proven to be the pivotal catalyst it was intended to be, unleashing historic investments in advanced energy solutions, revitalizing domestic manufacturing, stimulating economic growth, creating jobs, and lowering energy costs for households and businesses across the country. In celebration, we’re marking this anniversary with a look at five indicators that the IRA is already transforming the U.S. economy, with much more on the horizon.
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- Manufacturing Renaissance
- Consumer Investment
- Large-scale Renewables Deployment
- Job Creation
- Bipartisan Support
Two years in, the American manufacturing renaissance is evident in nearly every state in the country. According to Rhodium Group and the MIT Center for Energy and Environmental Policy Research’s Clean Investment Monitor, investment in manufacturing clean energy and transportation technologies alone totaled $89 billion since the IRA was passed—more than quadruple the $22 billion invested in the two years prior to the IRA’s enactment. The electric vehicle supply chain, particularly batteries, is driving much of the investment. Over $1 in every $4 of clean investment went to manufacturing in Q2 2024, an increase from $1 in every $10 in Q3 2022.
Even though the IRA passed along party lines, the benefits have been bipartisan. In fact, an analysis by the Clean Economy Tracker, developed by Atlas Public Policy and Utah State University, found that 76% of the $160 billion in announced investments in manufacturing facilities since 2022 are in Republican congressional districts.
Taking Action: Alongside the members actively involved in our Federal Investment and Manufacturing Working Group, Advanced Energy United advocates for advanced energy manufacturing policy – legislation and regulations that bolster the U.S. supply chain, from raw materials to finished products, for advanced energy and transportation technologies and promote effective reuse and recycling policies for our industry.
2. Consumer Investment
Investments in clean energy and energy efficiency benefit households by lowering and stabilizing their monthly utility bills, and improving overall grid resiliency.
The Clean Investment Monitor’s latest report published this month found that actual business and consumer investment in advanced energy solutions totaled $493 billion, a 71% increase from the two-year period preceding the legislation.
A major driver of that investment is electric vehicles. The IRA’s tax incentives – particularly the extension of the New Clean Vehicle Tax Credit – have helped charge up consumer interest in EVs, which now account for roughly 8 percent of all new vehicles sold nationally.
Consumer investment is also going towards home electrification and home clean energy generation; which includes heat pumps and other electric appliances, rooftop solar and home energy storage, and energy efficiency solutions. Recently, the U.S. Treasury announced that more than 3.4 million American families have already claimed more than $8 billion in residential clean energy and home energy efficiency credits against their 2023 federal income taxes, the first year that the IRA’s full adjustments to the value and scope of these tax credits were in effect.
- More than 1.2 million American families have claimed over $6 billion in credits for residential clean energy – such as solar electricity generation, solar water heating, and battery storage, among other technologies – averaging $5 thousand per family.
- 2.3 million families have claimed more than $2 billion in credits for energy-efficient home improvements – such as heat pumps, efficient air conditioners, insulation, windows, and doors – averaging $880 per family.
That investment was all made before the IRA’s “Solar For All” program was rolled out, which is awarding $7 billion to states, municipalities, and Tribes to support nearly 1 million households in low-income communities by increasing access to affordable, resilient, and clean solar and storage technology. Advanced Energy United teamed up with Rewiring America to help states design the programs with our guide, “Making the Most of the Federal Home Energy Rebates.” Those investments are not only helping families more easily afford newer, cleaner, more efficient appliances, they are saving families roughly $350 million annually in energy costs. Increasing access to affordable, resilient, and clean solar and storage technology solutions is a true rebuff to inflation for households.
Taking Action: Advanced Energy United advocates for policies that accelerate EV uptake, increase opportunities for Virtual Power Plants (VPPs) and Distributed Energy Resources (DERs), and the switch to building electrification, including reforms to the gas utility business model.
3. Large-scale Renewables Deployment
We can’t meet our 100 percent clean energy goals without major new sources of electricity generation, and thanks to a series of new and extended tax credits, the advanced energy industry is building new power sources across the country.
Forty-two large-scale clean electricity generating projects (across 30 states) have been announced since the passage of the IRA, according to national business group E2. E2’s IRA tracker, Clean Economy Works, illustrates the breadth of the development, with over $9 billion. About half of the projects are solar, with the other half made up of battery storage, wind, hydrogen, and EV hubs.
All this investment is also showing up on the electric grid: 473 gigawatts (GW) of clean energy capacity was installed in 2023, up from 308 GW in 2022 and nearly double the amount installed in 2021, reported Canary Media this summer. Solar accounts for most of that growth, and battery storage – while still small percentage-wise – is the category growing most quickly since the IRA was passed, with the U.S. deploying nearly 8 GW of new capacity in 2023, double the prior year.
The IRA also made some tax credits transferable, meaning clean energy developers can partner with a financial institution to take advantage of them, making them more accessible to our industries. Earlier this year, solar panel manufacturer First Solar was the first company to take advantage of the transferability, leading the way for other companies to follow suit, and evidence that the flexibility built into the IRA law is working as designed.
Taking Action: As Congress debates federal permitting reform, Advanced Energy United continues to advocate for state-level reforms to permitting and siting regulations. To that end, we developed a guide for decision-makers and stakeholders, which outlines policy principles that should be considered when reforming state policy frameworks. Reforming state-level siting and permitting policies to more closely align with these principles would make it easier for clean energy (and transmission) projects to be built, so America can keep up with growing energy demands, meet its energy goals, and provide economic opportunities for landowners and job seekers.
4. Job Creation
Investments in manufacturing and deploying large- and small-scale advanced energy solutions are creating new jobs in America. One review showed that the IRA has helped companies create over 334,000 new clean energy jobs. Another assessment, from E2’s IRA Two-Year Analysis Report, found that more than 100,000 manufacturing jobs have been announced by companies since the IRA was signed into law.
A report from the Political Economy Research Institute (PERI) at the University of Massachusetts Amherst, commissioned by the Blue-Green Alliance, found that the IRA could create as many as 9 million good jobs over the next decade—an average of nearly 1 million jobs each year. That includes more than 6 million jobs created over the next ten years by grants, loans, and tax credits and nearly 3 million jobs stimulated by new loan guarantee authority for the U.S. Department of Energy. A separate report commissioned by the AFL-CIO projected approximately 1.5 million jobs over the coming decade directly connected to clean energy tax credits.
Among the jobs being created are well-paying opportunities for electricians, mechanics, construction workers, technicians, support staff, and thousands of others. Seventy-five percent of the new jobs created by the IRA won't require a four-year degree, making them accessible to all Americans.
Taking Action: Our website page listing our members doubles as a career portal, with each company’s logo linking to job opportunities at companies within our membership leading the energy transition.
5. Bipartisan Support
Whether or not there is a change in leadership in Washington this November, the Inflation Reduction Act may prove resilient. The investments triggered, which are being felt in every part of the country, are winning over skeptics and boosting communities. While the IRA didn’t win any Republican votes on its way to passage, many Republicans are now defending the impact it is having, with some Republican U.S. House representatives saying that the U.S. shouldn’t defund or rescind the incentives:
“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. 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. Energy tax credits have spurred innovation, incentivized investment, and created good jobs in many parts of the country - including many districts represented by members of our conference.”
This is evidence of the IRA’s effectiveness. And, if voters choose political leaders that will continue to champion the IRA, the increased market certainty is sure to inspire confidence amongst businesses to continue investing in advanced energy solutions.
Taking Action: Advanced Energy United’s sister organization, Counterspark, empowers consumers to call on their lawmakers to support clean energy. Counterspark is educating people about how America has the solutions to slow climate change, and that we have the power to tell politicians to say “yes” to the technologies, policies, and projects needed to do that.
Looking Ahead
Congressional leaders have an opportunity to further unleash the promise of the IRA by passing comprehensive, bipartisan permitting reform legislation. Recently proposed legislation from Senators Barrasso and Manchin includes bill text that would help make it easier to site and permit large-scale renewable projects and long-distance transmission lines and make it easier to mine and process critical minerals needed for advanced energy solutions. The advanced energy industries will have increased confidence in investing if they know they can build projects more quickly and connect them to the power grid with greater ease.
“It has long been too difficult to build some of the critical energy infrastructure America needs,” said Harry Godfrey, Managing Director at Advanced Energy United when the bipartisan legislation was proposed. “Both parties agree that unreasonable timetables and fragmented planning processes are making it too difficult to invest and build, providing Congress a unique opportunity to pass legislation that unlocks America’s innovative industries and improves grid reliability and energy costs for households and businesses.”
Looking ahead, the IRA is just beginning to provide the economic and climate benefits it was created to help us achieve. When the IRA was passed, the Biden Administration estimated that the acceleration to advanced energy would reduce overall U.S. emissions by roughly 40 percent by 2030. And the latest research from RMI shows that if utilities better leverage IRA incentives, they could save customers an average of $12.7 billion a year in energy costs for the next 10 years, beginning in 2025. This is a key focus of work for Advanced Energy United.
The U.S. is still early in its journey to 100 percent clean electricity. Most states rely on fossil fuels – named gas – to power their electric grids. However, the IRA has given states more of the tools they need to improve energy resiliency, meet energy goals, and provide a more reliable and affordable energy system for all.