Inflation Reduction Act Bolsters Solar Power & Electric Cars
TL/DR –
The Inflation Reduction Act (IRA) is significantly boosting the solar and electric vehicle (EV) industries in the US, according to the Solar Energy Industries Association (SEIA). The US solar industry added a record 32.4 gigawatts (GW) of new electric generating capacity in 2023, a 37% increase from 2021 and a 51% increase from 2022, largely attributed to the IRA. The Act has also incentivized EV production, with Tesla sales increasing due to an expanded tax credit, and has stimulated over $92 billion of investment into EV production, creating 84,000 jobs.
The Inflation Reduction Act’s Impact on Solar Power and EV Industries
The Inflation Reduction Act (IRA), the largest reshoring legislation in U.S. history, has made significant positive impacts on the solar power and electric vehicle sectors, accelerating their transitions. Additionally, the IRA has boosted solar power in the U.S., as highlighted recently by the U.S. Solar Energy Industries Association (SEIA).
Solar Power Sees Massive Growth Due to IRA
The U.S. solar industry added an impressive 32.4 gigawatts (GW) of new electric generating capacity in 2023, marking a 37% increase from the record set in 2021 and a 51% increase from 2022, SEIA reports. Importantly, the SEIA attributes this success to the IRA, insisting that staying the course with IRA will lead to even more solar power generation in the future.
“The IRA is supercharging solar deployment and having a real impact on our economy,” said SEIA president and CEO Abigail Ross Hopper. “We must protect and optimize the policies driving these investments and creating jobs.” She added that, if federal clean energy policies are maintained, solar deployment will quadruple over the next decade.
With the current trajectory, SEIA predicts the U.S. will have enough solar power capacity to power 100 million homes by 2034. However, various factors could greatly affect this estimate.
One key aspect of the IRA is its encouragement for reshoring of solar module manufacturing, providing incentives for it. The result has been a substantial growth in solar module manufacturing in the U.S. The industry grew from 8.5 GW to an astonishing 16.1 GW from the end of 2022 to the end of 2023.
IRA Boosts EV Sales
The IRA has significantly boosted EV sales, especially for Tesla, which accounts for more than half of U.S. electric car sales. The tax credit introduced by the IRA has effectively reduced the price of Tesla vehicles by several thousand dollars, leading to increased sales. Full $7,500 tax credits are now available for the most popular electric car in the country fuel economy government site reports.
The IRA has also incentivized U.S. EV production and throughout the EV supply chain. The IRA has stimulated EV production growth within the U.S., not just for the vehicles themselves, but also for raw materials and battery manufacturing. According to one analysis, the IRA, together with the Infrastructure Investment and Jobs Act and the CHIPS and Science Act, has driven more than $92 billion of investment into EV production, creating 84,000 jobs.
“EVs are the inevitable future of transportation,” says industry expert Leo Banks. “The IRA offers U.S. automakers a path of continued global relevance, and, fortunately, it seems to be working.” He added that the Inflation Reduction Act is making U.S. blue-collar jobs great again, particularly in the cleantech sector.
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