Unpacking the Inflation Reduction Act’s Impact on the Solar Industry
- Business of Solar,Industry News
With the Inflation Reduction Act (IRA) signed into law several months ago, the historic legislation will provide lower energy costs for Americans, ensure energy security, and incentivize decarbonization efforts. The solar community has fully embraced this bill, which carries a funding allotment of $370 billion.
From residential homeowners to rooftop installers to utility providers to module manufacturers, the IRA offers a little something for everyone in the solar community. While the bill’s incentives aren’t geared toward everyone, it provides a much-needed jumpstart to the solar industry and improves the country’s efforts on transitioning to a net-zero future.
Now that some time has passed and solar industry participants have had time to unpack all of the bill’s provisions, it’s worth looking to see how the IRA is being implemented. Specifically, how it benefits American individuals and businesses and what it means for the solar community going forward.
Extension of the ITC for More Solar Certainty
While the IRA delivers vast benefits for individuals and industries outside the solar industry, analysts project the bill to significantly accelerate solar deployment and installation rates. For instance, it’s necessary to point first and foremost to the extension of the Investment Tax Credit (ITC) until 2030. The ITC, which is not a new tax credit—first implemented in 2006— provides a 30% federal tax credit for residential end users and commercial and industrial investors in solar energy properties.
Over the last decade, the ITC has played a major role in assisting the 33% growth in residential and commercial solar. The incentive’s success also includes ensuring social equitability in renewable energy deployment by providing an additional 10 - 20% credit for developers installing a project in a low-income community or building.
However, the ITC has traditionally relied on year-by-year extensions and the legislative processes that went along with those extensions. This uncertainty swirling around each year’s deadline left the solar industry in a constant state of limbo, as there was no guarantee that the tax credits would continue.
The ITC extension to 2030 eliminates this uncertainty and solidifies the solar industry outlook for the next eight years. This momentous step allows companies and consumers to confidently establish long-term solar investments as well as lower energy costs to continue building their pipelines and portfolios with more certainty.
Impacts of the IRA
As mentioned, the solutions and benefits of the IRA are not geared toward every individual or every industry. However, the bill has spun the wheels of opportunity toward a more sustainable future. By incentivizing all aspects of the solar industry, from module manufacturers to installers to consumers, the solar industry is on track for growth in all directions.
And if enough Americans see their energy costs go down and understand the simplicity with which a solar installation process can occur, there will be no slowing down the shift to renewable and sustainable energy.
Reach out to learn more about how you can benefit from the incentives put forth in the IRA and how Trina can play a role in your approach to the right solar solutions.
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