More than simply curbing inflation, the Inflation Reduction Act (IRA) is poised to significantly impact the environment and the way Americans power their lives. The act pledges $369 billion to support the development of clean energy resources, with the goal of reducing power sector carbon emissions by 75 percent by 2032.
In reality, however, the IRA’s provisions make these tax credits uncapped and perpetual, which likely pushes the value to developers well over $1 trillion before meaningful efforts to phase out financial incentives.
So, how does the IRA impact utility operators?
In simple terms, utilities no longer have to watch from the sidelines. As the organizations that operate and maintain the bulk power system, regulated utilities have had a front-row seat to previous legislation over the last 20-plus years aimed at competitive project development through independent power producers (IPPs) and their financing partners. The IRA has overhauled federal tax codes so that investor-owned utilities are among the companies that will benefit the most through newly unlocked development cost advantages.