What’s your take on the Inflation Reduction Act?
Once in a generation. Milestone. Historic. These are all really good ways to think about the Inflation Reduction Act. It is a $369 billion first-of-its-kind climate and clean tech investment. We’ve never done anything like this in US history.
Here at Stem, we think there are a few places where it will be transformative: our power system, our electric grid writ large, our transportation system, and our energy security as it relates to supply chain, domestic manufacturing, and clean energy jobs.
As the Vice President of Policy and Regulatory Affairs, it is exciting and energizing to see our country take such a significant leap forward at this historic time.
What does the Inflation Reduction Act mean for Stem + AlsoEnergy’s Customers?
For Stem and AlsoEnergy customers who are adopting and building energy storage and solar, the most exciting pieces of the bill are the clean electricity tax credits for both investment and production. These tax credits are in place for 10 years until 2032 and have a provision to be extended if the critical goal of reducing greenhouse gas emissions from the power sector by 75% isn’t met.
This is a significant change from the previous tax policy in which credits were extended year-over-year, sometimes at the last minute, resulting in much less certainty around investing and cost. This brings the cost down as well as gives more surety for customers who are adopting these critical new technologies for the grid.
The other piece of this legislation that I’m really excited about are the increased bonuses for domestic production so that the manufactured content is US steel and US cement. Also, the energy community provision calls for and gives extra credits for projects that are built in communities that had or have high fossil fuel employment and/or previous coal plants and coal production. And, credits for projects built in low income communities and on Indian lands are also available.
The third part of the package that is exciting are the prevailing wage and apprentice requirements to spur the creation of strong, good-paying jobs and teach people who are new to the industry via apprenticeships in order to bring them along and move us all forward into the new world that we’re creating for energy.
We’re already working with our customers to understand the bill’s implications, and we believe that these critical changes to policy are going to make a significant difference for the adoption of both solar and storage.
What are the implications for energy storage?
For energy storage in particular, the most important provision in the Inflation Reduction Act is the standalone storage investment tax credit. Previously, energy storage could only receive tax credits if it was attached to solar. Now, with the standalone credit, storage can be cited and built wherever it’s needed on the grid and wherever customers need it. This, we believe, will be significant for customer adoption to all of our customer classes: corporate, large commercial and industrial, independent power producers, solar and storage developers, utilities, IOUs, public power, and municipals.
So, we’re really excited about this provision. We’re working with our customers as they plan their systems and are thinking about where they want to make these investments and build out our grid for more renewables and increased resiliency, and to continue the energy transformation that’s underway.
At Stem, we’re looking forward to the implementation of the Inflation Reduction Act. Customers are starting to plan where they may want to take advantage of these incentives and build out new projects in new communities and places that they haven’t considered before because they weren’t economically viable. So stay tuned, there’s more to come! We’re continuing to work together on the energy transformation at Stem.