Think the Net-Zero Carbon Future is Years Away? The Inflation Reduction Act Changed That.

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3 min read

By Nicole Geneau

Blogs
3 min read

If you’ve followed the climate legislation debate in Congress closely like I have, you probably experienced a roller coaster ride of emotions. Negotiations were stalled one day, dead the next, and then alive once more. Now that President Biden has signed the Inflation Reduction Act (IRA) into law, it’s time to understand how this legislation will accelerate the energy transformation.

There’s a common theme throughout this legislation that resonates with us here at AlphaStruxure –and to our clients: accelerating the energy transformation. Let’s dig into some of the details of the Act and what they mean for you.  

A big boost for microgrids: The bipartisan Infrastructure Investment and Jobs Act (IIJA) that became law last year was a big win for microgrids because it provided grant funding to enhance grid resilience, upgrade distribution systems, and integrate distributed energy resources like microgrids. The IRA goes much further by opening up tax credits that have been reserved exclusively for renewable energy technologies. The legislation expands the solar Investment Tax Credit (ITC) to include both microgrid controls and components, including energy microgrids, storage technology, biogas property, microgrid controllers, and linear generators. These technologies are eligible for a six percent credit or a 30 percent bonus credit for any qualified projects that begin construction before January 1, 2025.

Incentives for clean commercial and heavy-duty vehicles: There’s been a lot of interest on the consumer EV incentives in this legislation. However, there’s also strong incentives for clean commercial and heavy-duty vehicles. This legislation creates a new tax credit for qualified commercial electric vehicles. The provision provides a business tax credit of up to 30 percent for certain commercial clean vehicles with a per vehicle limit of:

  • $7,500 for vehicles less than 14,000 pounds, including light-duty vehicles such as vans, city delivery trucks, and box trucks;
  • Up to $40,000 for vehicles over 14,000 pounds, including medium and heavy-duty trucks, transit buses, and long-haul tractor-trailers.

State and local governments receive direct grant support through a $1 billion fund dedicated to heavy-duty vehicles such as electric school and transit buses and garbage trucks. That support is in addition to the $60 million the EPA will receive to electrify vehicles at airports, railyards, and distribution centers and the $3 billion to make our maritime ports clean and electrified.

Bottom line: As this legislation is implemented, municipalities and businesses will need a significant amount of resilient charging infrastructure to meet the increased demand for sustainable energy to power electric vehicles.

Accelerating advanced manufacturing: Responding to supply chain shortages and inflation, this legislation heavily emphasizes domestic manufacturing, including facility modernization and decarbonization. The legislation provides grant funding for a range of programs that cover the costs of energy upgrades to reduce emissions at manufacturing facilities, including:

  • Low- or zero-carbon heat systems
  • Carbon capture transport, utilization, and storage systems
  • Energy efficiency and reduction in waste from industrial processes
  • Technology designed to reduce greenhouse gas emissions
  • Re-equipping, expanding, or establishing an industrial facility for processing, refining, or recycling critical materials

Buildings: The expanded commercial tax credit for energy efficiency improvements will expedite the energy transition of the country’s buildings, which will create healthier and more productive indoor environments. Commercial buildings aren’t alone in benefiting from the IRA ― schools and public housing are set to receive millions of dollars to transition their energy infrastructure. As we consider ways to control and optimize energy, integrated energy consumption is a logical and effective first step.  

Adoption of renewable fuels: One of the challenges our customers face in considering how to reduce their carbon footprint is finding a suitable and economical substitute for natural gas and diesel. These alternatives must have the same energy density requirements and technical capabilities ― the ability to be turned on and off, and/or used in high heat processes, like cement, glass, or steelmaking. Electrification isn’t a one-size-fits-all solution, and this bill recognizes the need to expand excise tax credits for biodiesel, renewable diesel, and other alternative fuels.

Regardless of whether it’s a tax credit or a grant, this legislation will encourage both the private and public sectors to take the next steps to decarbonize facilities, incorporate microgrid controls, and deploy EV fleets. A grant and/or tax credit, combined with our Energy as a Service (EaaS) business model, means these projects make even more economic sense and put ambitious sustainable goals within reach.

At AlphaStruxure, we can incorporate all available grants and tax incentives, further reducing long-term costs for our clients. We’re excited to be a turnkey partner to help our customers accelerate their energy transformation journey.

If you’re interested in learning more about how AlphaStruxure can partner with your organization to achieve your sustainable energy goals, reach out to our team at info@alphastruxure.com

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About the Author

Nicole Geneau

SVP, Development

Nicole Geneau is a tested leader with over 20 years of experience spanning clean and alternative energy, finance and investment, commercialization of innovation, strategy, and professional services. At AlphaStruxure, she leads the development team and supports developers to guide customers and deals in the pipeline from start to close.

Prior to AlphaStruxure, Nicole was Strategy and Market Development Director for Mortenson’s Integrated Energy Solutions business, actualizing electrification trends across the company’s vertical / commercial and energy /infrastructure operating groups. This includes incorporating electrified transportation systems, microgrids, distributed energy resources and utility grid modernization.

Nicole also brings extensive industry experience as a leader in large-scale renewable energy development. She was previously Development Director for NextEra Energy Resources where she was a key member of the team that delivered $2.5 billion of capital investment in renewable energy generation facilities in Canada. She was responsible for market entry strategy, development, landowner contracts, PPA negotiations, community and stakeholder engagement, government relations, siting and permitting, construction, operation, and financing. Prior to NextEra, Nicole managed a portfolio of investments in energy technologies working extensively with utilities and research institutions to foster innovation in the sector.

Nicole is a Sloan Fellow in Leadership & Innovation from MIT, a Fellow in Economics of Energy from the UK Foreign & Commonwealth Office (University of Reading, UK) and has a Bachelor of Commerce from Queen’s University in Canada.

Segment Expertise

No two energy transformation journeys are the same. Achieving unique business goals means creating and implementing a tailored action plan specific to your industry and individual targets.

Helping energy-intensive facilities and supply chains to decarbonize rapidly and expand capacity, without waiting for the grid to catch up

Accelerating decarbonization and the electrified transportation transition for medium to heavy-duty fleets and other transit services

Achieving meaningful climate goals across mining, cement, metals, and glass, among others

Stabilizing long-term energy costs while achieving resilient, zero-carbon energy across pharma, biotech, medical devices, and hospitals

Generating fewer greenhouse gas emissions in the face of a growing global food demand in the snacks, dairy, meat, and beverage industries, and beyond

Creating positive and sustainable visitor experiences by reducing greenhouse gas emissions across energy-intensive entertainment facilities

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