Passage of the Inflation Reduction Act (IRA) last year likely helped usher in more than $150 billion in planned domestic utility-scale clean energy projects and manufacturing facilities, according to an April 17 report released by the American Clean Power Association (ACP).
That amount would surpass the total investment in clean power projects commissioned in the U.S. between 2017 and 2021.
“If completed, these investments and projects will strengthen our energy independence, improve air quality, support one million American clean energy jobs and put us on track to produce enough affordable domestic clean electricity to power the equivalent of every American home by 2030,” ACP said in the report.
However, clean energy projects and jobs could be at risk if the permitting process is not streamlined and expedited, ACP said.
The report shows that between August 2022, when the IRA was signed into law, and the end of March 2023, 46 new or expanded utility-scale clean energy manufacturing facilities were announced. Combined, the planned projects have a capacity of about 96 gigawatts (GW). The project would create about 18,000 new manufacturing jobs and save more than 24 million utility customers $4.4 billion, ACP said.
The report was shared as U.S. energy companies aim to lower emissions to slow global warming. Renewables and energy efficiency have been identified as central pillars in transitioning the energy sector to net-zero CO2 emissions. Electrification and related technologies such as batteries; carbon capture, utilization and storage (CCUS); and hydrogen and bioenergy are also expected to have key roles.
Governments have been enticing energy companies to pursue such projects with tax incentives. The IRA provides nearly $370 billion in incentives for clean energy and climate-related spending. The law, in part, aims to reduce U.S. carbon emissions by about 40% by 2030.
“The clean energy transition is racing ahead. American companies are making massive investments that are increasing American competitiveness and revitalizing the manufacturing sector,” ACP CEO Jason Grumet said in a news release. “But we cannot build a strong, modern and resilient economy absent dramatic improvement in the permitting of new energy infrastructure.”
Plans for 26 solar manufacturing facilities dominate the power projects tracked by ACP.
Qcells, the solar division of South Korean conglomerate Hanwha Corp., plans to invest more than $2.5 billion to grow its manufacturing capacity in the U.S. The company’s new factory in Cartersville, Georgia, will manufacture solar panel components including modules, silicon ingots, wafers and cells. Production is scheduled to begin in 2024.
Hanwha also said it will double the capacity to 300 megawatts (MW) as its solar panel assembly operations in Dalton, Georgia.
Solar incentives in the IRA include an advanced manufacturing production tax credit that can be applied to the domestic production of components such as modules, photovoltaic cells and wafers and solar-grade polysilicon, among other items.
The U.S. is at the beginning of its journey to add 30 GW of offshore wind capacity by 2030. Tax credits available to offshore wind developers and manufacturers are geared toward helping the sector grow as the U.S. government prepares to roll out additional lease sales.
The IRA established new advanced manufacturing production tax credits for offshore wind energy structures and vessels made in the U.S. They include a 10% credit for vessel retrofits, as well as credit for production of components such as blades, foundations, nacelles and towers.
Companies announcing projects since the IRA’s passage include GE Vernova, which plans to manufacture nacelles; GE subsidiary LM Wind Power, which plans to manufacture offshore wind turbines; and Siemens Gamesa, which also plans to manufacture nacelles. All three facilities will be located in New York.
The energy sector also has seen an uptick in planned energy storage projects post-IRA. ACP’s report shows 10 utility-scale battery storage manufacturing facilities were announced between Aug. 16, 2022, and March 31, 2023. The IRA offers investment tax credits for such facilities.
Facilities announced include American Battery Factory’s (ABF) planned facility in Arizona where lithium iron phosphate battery cells for home and commercial energy storage systems will be made. The $1.2 billion facility, which will also serve as ABF’s headquarters, is the first in a series of planned U.S.-based battery cell gigafactories the company is pursuing.
Plans for eight wind power manufacturing facilities were announced during the period covered by the report. These include production facilities for turbine towers, gearboxes and nacelles.
ACP pointed out that three closed manufacturing plants will now reopen. They are:
- Siemens Gamesa’s wind turbine manufacturing plant in southeast Iowa;
- Siemens Gamesa’s nacelle facility in Kansas; and
- TPI Composites’ Iowa facility, which closed in 2021, set to reopen after the company and partner GE Renewable Energy reached a 10-year agreement for turbine blades.
“This agreement is possible in part due to the support provided by the Inflation Reduction Act of 2022 for critical American industries serving the domestic renewable energy sector,” TPI CEO Bill Siwek said in a Nov. 3 news release.
Based on the clean energy project pipeline, ACP said the U.S. is positioning itself to secure its energy independence and lead the world in clean energy buildout with technology, resources and workforce in place.
“However, to realize this clean energy future and ensure the full potential of these projects, ACP urges the administration and Congress to continue improving trade policies, supporting next-generation technologies, finalizing effective tax implementation and working to enact commonsense permitting reform,” ACP’s report said.
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