When the Bipartisan Inflation Reduction Act was signed into law in August of 2022, it promised to cut greenhouse gas emissions by nearly 40% by 2030. A substantial portion of this reduction was expected to come from increased adoption of solar energy. As we cross the two-year anniversary of one of the largest investments in the American economy, energy security, and climate in the nation’s history, we can look to other important stats around solar to help us see how it has fared under the act.
A tremendous leap in capacity
A SEIA Solar Market Reports notes that the U.S. solar industry added 32.4 gigawatts (GW) of new electric generating capacity in 2023, a staggering 51% increase from the year before. This type of exponential growth not only means that solar is growing faster than ever, but that it will eventually become the dominant form of energy.
Making solar accessible to all
In August of 2024, the “Solar for All” program was announced, which allocated $7 billion to provide increased solar access for disadvantaged communities to deploy and benefit from residential solar power. Solar for All is expected to save households about $400 per year on energy bills.
More jobs in solar
In just the first year of the act (from August 2022 to August 2023), it already created more than 170,600 clean energy jobs, many of those in solar, across the United States.
An investment in manufacturing in the U.S.
The act offers substantial tax incentives, promoting investment and technological advancements in solar PV manufacturing. These measures are anticipated to enhance the global competitiveness of U.S. solar manufacturers and contribute to a reduction in greenhouse gas emissions. We’ve seen a wave of headline news in the past two years announcing solar manufacturers who are moving or expanding their manufacturing to the U.S.—including one of the largest and longest-standing solar manufacturers in the world.
Extending incentives
After the Investment Tax Credit (ITC) launched in 2006, it was considered one of the most important federal policy mechanisms to support the growth of solar energy in the United States. This tax credit was scheduled to drop from 26% in 2022 to 22% in 2023 and then to 0% for 2024 and beyond (for residential systems). Thankfully, the Inflation Reduction Act extended and increased the credit up to 30% through 2032, then to 26% in 2033, and 22% in 2034 before it finally expires. This credit creates a significant reduction in the initial installation price of both residential and commercial solar systems.
Economic responsibility
It turns out investing in clean energy can work great both at the household level and for the entire country. The Inflation Reduction Act is projected to lower the federal deficit by about $238 billion over the next decade due to, among other things, the increased adoption of renewable energy. By investing in solar today, we are able to save more money on energy and utility costs over time and lock in the cost of our energy for years to come.
The future of the act
However, while it is considered the law of the land at the moment, the future of the Inflation Reduction Act (IRA) is uncertain due to various political, economic, and legal factors. Its longevity depends on the political climate, economic conditions, and public support over time. Changes in administration or congressional majorities could alter its provisions, while the Act’s success in addressing inflation and promoting clean energy will influence its stability. Legal challenges and effective implementation also play crucial roles in determining the IRA’s future.