The Inflation Reduction Act and its Impact on Solar
This past Sunday August the United States Senate passed the Inflation Reduction Act. “The legislation does a lot of things, including tackling deficit reduction, health care access and prescription drug pricing, but addressing the energy industry and climate change is one of its most significant aims” Isaacs-Thomas. With the implementation of this legislation, residents will receive incentives to switch to solar energy. The bill has set a goal to reduce greenhouse gas emissions by 40%, a huge increase from the current plan which only expects a 25% reduction. To meet this goal, huge changes are meant to take place throughout the country.
To make renewable energy options more available to the public, tax credits and other financial benefits of solar panels are awarded as incentives to switch to solar energy. To move away from oil and gas, homeowners can receive tax credits to make their homes more energy efficient. The bill makes switching to rooftop solar, water heaters, and electric HVAC systems more affordable. The bill also targets low-income households by including home energy rebate programs for people who electrify their home appliances.
Homeowners with rooftop solar systems implemented in 2022 will receive a 30% tax credit! This tax credit is available until the year 2032 and reduces after to 26%, giving homeowners a push to switch sooner rather than later. In 2035, the tax credit will drop from 22% to 0%. The tax credit currently available gives homeowners a huge benefit to switch to renewable energy.
Not only homeowners benefit from the Inflation Reduction Act. Residents who purchase a new or used electric vehicle can also get money off their purchase. The bill’s incentives directly help consumers switch to more energy efficient options. All of which will help reduce the demand for fossil fuel systems.
Consumers aren’t the only ones who benefit from the Inflation Reduction Act. The act puts $30 billion towards the advancement of American manufacturing of solar materials. This includes businesses who create wind turbines, batteries for electric vehicles, solar panels and more. The act provides tax credits for 10 years to businesses who create these products.
The United States is ready to do its part to make a difference in the climate crisis. The bill has the opportunity to reshape the American energy industry. Change doesn’t happen overnight, but the creation of this bill is pushing the United States in the right direction towards providing a safer world for future generations.
Sources
(2022) Isaacs-Thomas, “What the Inflation Reduction Act does for green energy” PBS. https://www.pbs.org/newshour/science/what-the-inflation-reduction-act-does-for-green-energy
(2022) “The Inflation Reduction Act Provides Potential Game-Changing Benefits for U.S. Solar Industry” Wiley. https://www.wiley.law/alert-The-Inflation-Reduction-Act-Provides-Potential-Game-Changing-Benefits-for-US-Solar-Industry
“Homeowners Guide to the Federal Tax Credit for Solar Photovoltaics” Office of Energy Efficiency and Renewable Energy. https://www.energy.gov/eere/solar/homeowners-guide-federal-tax-credit-solar-photovoltaics