Advanced Energy Perspectives

On Tuesday, President Biden signed the Inflation Reduction Act (IRA), the most significant legislation ever enacted to advance clean energy, electrify transportation, and combat climate change. That much has been well established. What’s been underappreciated is just how transformational the IRA could be. Akin to the industrial policies of earlier eras, it has the potential to reshape the U.S. economy. Employing tax incentives, grants, loans, and innovative financial tools, the IRA, when combined with the Infrastructure Investment and Jobs Act passed last year, will leverage billions in public capital to catalyze trillions in private investment and total economic impact. In so doing, it is poised to rapidly expand domestic markets for advanced energy and transportation technologies, revitalize American manufacturing, and reshape how we produce and use electricity. In other words, as industrial policy for an advanced energy economy, the whole of IRA is greater than the sum of its parts.

As the West deals with a record-setting heat wave that is fueling catastrophic droughts and wildfires and is testing the limits of America's aging power grid, our team at AEE is focused on how we can improve grid resilience and connect more clean energy by establishing a regional transmission organization (RTO) to operate the power grid for Western states. Now, we can say with certainty just what the West would gain in savings, jobs, and economic growth - and it’s a lot.

All eyes were focused on energy negotiations in Washington for the better part of 2021, but with less fanfare, advanced energy companies powered a record-breaking year for investment in the energy transition. BloombergNEF and the Business Council for Sustainable Energy’s 10^th annual Sustainable Energy in America 2022 Factbook released last week quantifies the industry’s progress with year-over-year data and insights on energy efficiency and renewables. The Factbook records new highs in the deployment of renewable power, battery storage, and electric transportation, despite lingering COVID setbacks and supply chain bottlenecks economy wide.

After nearly two years of pandemic paralysis, the new worry about the U.S. economy is inflation. After a long period of stability, prices are up, taking a bite out of household spending power. And as usual when prices rise, some of the most visible evidence can be found at the gas pump and in heating bills. But the spike in these energy prices shouldn’t be thought of as inflation at all. Rather, it’s a function of volatility, which is an inherent feature of fossil fuels. The answer to this price volatility is not found in the Strategic Petroleum Reserve, gasoline-tax holidays, or interest-rate increases. The solution is advanced energy.

What electric school buses do for air quality is well known. Swapping diesel buses for electric buses eliminates these vehicles as sources of local air pollution, which affects the schoolchildren who ride them every day as well as the communities they travel through. But investing in electric school buses also contributes to the economy. With the funding for school bus electrification provided in the recently passed infrastructure bill, that economic boost is on the way.