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Understanding How the Inflation Reduction Act Affects Energy Management

Understanding How the Inflation Reduction Act Affects Energy Management


The Inflation Reduction Act Explained

The Inflation Reduction Act (IRA), signed into law in August 2022, is the next step in the Biden-Harris Administration's efforts to tackle climate change and promote clean energy. The act builds on the Bipartisan Infrastructure Law, also known as the Infrastructure Investment and Jobs Act, which was passed in November 2021. The IRA included a $370 billion investment in clean energy and has been called the “most significant action Congress has taken on clean energy and climate change in the nation's history.”

Overall, the Inflation Reduction Act aims to ensure America remains a global leader in clean energy. The IRA proposes a range of policy measures to reduce inflation and promote economic growth while also addressing climate change. Although the policy measures encompass several industries and objectives, their main impact on the energy and power sector is to increase the economic viability of clean energy projects and expedite project development, especially after a slowdown caused by the pandemic.

The act encompasses a range of initiatives spanning many sectors, including energy, manufacturing, environment and water, transportation, vehicle manufacturing and agriculture. Some measures include tax incentives for clean 
energy investments, funding for scientific research and investments in infrastructure projects to create job opportunities and stimulate economic growth. Additionally, the IRA has policies that go beyond energy and manufacturing, aimed at a wider effort to decrease greenhouse gas emissions. These policies include tax 
incentives for electric vehicles and regulations that limit carbon emissions from power plants and other sources.

The Inflation Reduction Act and Energy Management

Overall, the Inflation Reduction Act will generate numerous opportunities for the energy industry, and it will have a positive impact on energy managers, including private companies and public organizations such as co-ops and utilities. Here's a quick overview of several key impacts of the Inflation Reduction Act on energy management.

Reduce Dependence on Fossil Fuels

The IRA is expected to reduce America's dependence on fossil fuels by promoting renewable energy production. The act proposes measures to increase solar and other renewable energy production, unlocking clean energy options for utilities and developers. This would reduce the country's reliance on fossil fuels and protect US consumers from volatile fuel price swings that can result from global socioeconomic conditions. In addition, the act's proposed incentive programs are expected to more than double wind and solar energy production capacity by 2030, significantly boosting the clean energy sector. By reducing dependence on fossil fuels and increasing investment in renewable energy, the IRA aims to create a more sustainable and resilient energy system for the future.

Increase Grid Reliability

The IRA is expected to enhance grid reliability by promoting the development of distributed solar projects nationwide. Some incentives included in the act for wind and solar projects are available only for projects up to 5 megawatts, encouraging more distributed solar rather than large centralized projects. The approach helps avoid the potential for widespread power outages when a single centralized power plant experiences problems. Instead, scattering renewable projects across the country can help ensure that power is more reliably available to consumers. By 
promoting the development of distributed solar projects, the IRA aims to increase grid reliability and create a more resilient energy system that better withstands disruptions and provides more consistent power to consumers.


Encourage Utilization of Domestic Products

The IRA includes incentives to encourage developers to partner with domestic manufacturers on their energy projects, which is expected to boost the usage of American manufacturers. This could result in sourcing implications for the energy management sector, shifting their approach to development. The IRA’s support for domestic manufacturers can lead to the creation of new job opportunities and economic growth. This is especially beneficial for the manufacturing industry, which has been struggling with fierce competition from foreign producers.

Increased Interest in Development

The IRA is set to raise demand and interest in clean energy development due to its incentives, making new developments much more economically achievable. These incentives are already positively impacting clean energy project development, as many cities and developers are exploring how they can use available land for wind or solar development. Although the portal for claiming the incentives is still in progress, it's essential to begin preparations to take advantage of these opportunities since they are offered on a first-come, first-served basis.


Learn What’s Possible with Evergy Energy Partners

At Evergy Energy Partners, we’re ready to guide you through the process and help you determine which incentives and bonuses you are eligible for under the IRA. With these incentives, we anticipate that the IRA will greatly increase demand and interest in clean energy development, so we recommend reaching out and having a conversation with us soon.

We’re conductors of possible. As the energy marketing division of investor-owned utility Evergy, we have a long-standing reputation for best-in-class energy management solutions. Evergy has provided reliable, affordable energy to consumers for more than 100 years, and for the past 20 years, our team has used that knowledge to advise municipalities, co-ops and other power providers on how to manage their energy safely, efficiently, and reliably.

By providing tailored solutions that meet the unique needs of each client, we can help you achieve your energy goals. Ready to see what’s possible? Our team is here to help you navigate the market. Get in touch today.

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