On August 16th, 2022, President Biden signed The Inflation Reduction Act (IRA) into law, creating the most significant clean energy investment in U.S. history to reduce carbon emissions by 40% by 2030 and reach net-zero by 2050.
Key provisions of the IRA will drive significant clean energy investments throughout the United States. These investments will bolster domestic manufacturing and innovation and stimulate good paying job growth while prioritizing underserved communities. With $369B of new funding the IRA will have dramatic economic impacts widely across the country.
Over the next ten-plus years, we’ll see a broad U.S.-based manufacturing renaissance, from solar panels and power electronics to steel, electric vehicles, and batteries. With pervasive domestic content provisions and advanced manufacturing incentives, all clean energy projects in the future will be influenced by the IRA to source equipment and materials from U.S.-based manufacturers. Additionally, the pervasive prevailing wage & apprenticeship requirements in the IRA will drive the use of federal incentives to support well paying jobs for our domestic workforce.
For individuals (residential) and commercial entities (non-residential) looking to install Ubiquitous Energy’s UE Power™ transparent solar windows, the IRA will incentivize projects by extending the pre-existing Investment Tax Credit (ITC). With the ITC, solar project owners can claim a credit on their federal income tax returns for a set percentage of the total installed solar project costs.
The IRA has extended the ITC rate for individuals to 30% through 2032. After that, the ITC will decrease to 26% in 2033, 22% in 2034, and sunset to 0% after 2034.
For the commercial market, the base ITC rate increased to 30% through 2032 (for projects sized under 1MWac). Like the ITC for individuals, it will step down after 2032 but be subject to national CO2 emissions achieving a 75% reduction target from 2022 levels and could be extended further if the U.S. fails to meet the reduction target. Additionally, commercial solar projects will benefit from stackable ITC adders that ascribe value to specific project requirements and use cases that can potentially max the ITC out at 70%.
- Domestic Content:10% ITC adder for using products manufactured in the U.S.
- Energy Communities:10% ITC adder for siting projects on or adjacent-to lands impacted by fossil-fuel extraction and processing
- Low-Income Community: 10%-20% ITC adder for servicing low-income energy subscribers or a qualified low-income residential building project
The extension of the ITC under the IRA is MASSIVE. Additionally, it includes a direct pay option for tax-exempt entities that install solar projects. This direct pay feature is new to the IRA and represents a windfall to the public sector. The direct pay option will provide a cash payment to the tax-exempt entity equal to the applicable ITC amount. This option is a significant win for tax-exempt entities previously prevented from owning solar assets at market value (net of incentives), such as universities, municipalities, state agencies, tribal governments, and more. These entities can now commit capital to solar energy projects and assume the full financial benefits of solar asset ownership.
With the adoption of our UE Power™ truly transparent solar windows, our customers will significantly benefit from measures taken in the IRA to make new clean technologies affordable, domestically manufactured, and impactful. Ubiquitous Energy is proud to contribute to the U.S. manufacturing renaissance as a domestic transparent solar window manufacturer.
Now is the time to include UE Power™ in the design process for any new construction or retrofit project. Our commercial product will be available in 2025, so please contact us to see if your commercial project is a good fit for a transparent solar window system.
The White House, “FACT SHEET: The Inflation Reduction Act Supports Workers and Families.” Whitehouse.gov, August 19,2022, https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/19/fact-sheet-the-inflation-reduction-act-supports-workers-and-families/
The White House, “FACT SHEET: Inflation Reduction Act Advances Environmental Justice.” Whitehouse.gov, August 17, 2022, https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/17/fact-sheet-inflation-reduction-act-advances-environmental-justice/
Office of Energy Efficiency & Renewable Energy “Federal Solar Tax Credits for Businesses” energy.org, https://www.energy.gov/eere/solar/federal-solar-tax-credits-businesses