The renewables sector is growing and shows no signs of slowing down. This rapid expansion presents business opportunities to reduce costs for ratepayers, promote clean energy and open new revenue streams. Yet this expansion also brings numerous challenges that businesses must navigate, and recent policy changes have only exacerbated these challenges.
In the United States, the Inflation Reduction Act (IRA) is arguably the most impactful energy legislation in the country’s history. By uncapping and making perpetual the tax credit for renewables, the IRA gives federal support to the renewables sector, and the monetary value of that support will likely far surpass the approximately $400 billion that many analysts have cited. But great opportunities bring great challenges for utilities, who must ensure accelerated growth does not come at the expense of reliability.
What particular challenges do developers and utilities face, and how can industry participants navigate these challenges as the IRA accelerates the growth of the renewables market?
What pre-existing challenges do utilities face?
Even prior to the IRA, federal and state governments in the U.S. have driven business by sponsoring energy legislation. In 2018, for example, California passed Senate Bill 100, which aims to power the state exclusively with clean energy by 2045. Additionally, incentive programs across the U.S. have increased electric vehicle purchases.