In 2050, the US Power Info Administration (EIA) initiatives that complete US photo voltaic capability, which incorporates each utility-scale photo voltaic and rooftop photo voltaic within the business and residential sectors, might vary from 532 GW to 1,399 GW. In its Annual Power Outlook 2023 (AEO2023), it presents 16 situations, or circumstances, that mission long-term vitality developments in the US by 2050.
EIA’s Points in Focus: Inflation Discount Act Instances within the AEO2023 focuses on 4 of the 16 circumstances that adjust the quantity of tax credit that clear vitality applied sciences obtain underneath the 2022 Inflation Discount Act (IRA). In a single case with out the IRA, photo voltaic capability reaches 726 GW by 2050. Three separate circumstances that assume numerous uptake ranges of the tax credit mission as much as 274 GW extra photo voltaic capability by 2050 than there could be with out the regulation.
Beneath the IRA, qualifying clear vitality initiatives can obtain extra bonus tax credit stacked on high of a base tax credit score worth in the event that they fulfill sure necessities. A qualifying photo voltaic mission can select both a credit score for the funding in clear vitality, referred to as an funding tax credit score (ITC), or a credit score for producing or promoting clear vitality, referred to as a manufacturing tax credit score (PTC).
As an example, EIA assumes within the AEO2023 Reference case that homeowners of photo voltaic initiatives within the electrical energy sector desire the PTC, which has a base worth of USD 5 per MWh for the primary 10 years of electrical energy gross sales. The worth is 5 instances greater for initiatives that obtain a bonus credit score for assembly labour necessities. Different bonus credit elevate the credit score worth even greater if initiatives are constructed domestically or are positioned within the IRA’s definition of vitality communities.
These three circumstances study the IRA whereas holding different enter assumptions fixed to their AEO2023 Reference case values. The AEO2023 Reference case, which serves as a baseline, or benchmark, displays legal guidelines and rules adopted by mid-November 2022, together with the IRA. The opposite three circumstances are the:
– Excessive Uptake case, which assumes, the place relevant, that certified initiatives obtain the utmost bonus tax credit
– Low Uptake case, which assumes most certified initiatives solely obtain the bottom tax credit score
– No IRA case, which excludes energy-related IRA provisions
Within the Reference case, US photo voltaic capability, together with rooftop photo voltaic, reaches 920 GW in 2050, about 194 GW greater than within the No IRA case. Photo voltaic capability nonetheless grows within the No IRA case, partially, due to declining capital prices. US photo voltaic capability grows essentially the most after we apply extra bonus credit. Within the Excessive Uptake case, the place we apply the utmost bonus credit for grid-scale photo voltaic, US photo voltaic capability reaches slightly below 1,000 GW. The Low Uptake case is much like the No IRA case and leads to simply over 720 GW of photo voltaic.
EIA’s Points in Focus: Inflation Discount Act Instances within the AEO2023 has detailed information and extra info on how its IRA tax credit score assumptions differ among the many 4 circumstances. For photo voltaic PV initiatives within the electrical energy sector, the Low Uptake case applies solely the bottom tax credit score. Its Reference case applies the bottom credit score and prevailing wage and apprenticeship bonus credit score. The Excessive Uptake case applies the bottom tax credit score in addition to the prevailing wage and apprenticeship, home content material, and the vitality communities bonus credit.
Within the business sector, EIA assumes photo voltaic PV initiatives obtain the bottom credit score within the Low Uptake and Reference circumstances. Within the Excessive Uptake case, it assumes initiatives additionally obtain the home content material bonus credit score. For residential photo voltaic, certified initiatives don’t obtain bonus credit underneath the IRA’s residential clear vitality credit score provision. Due to this fact, it assumes residential photo voltaic initiatives obtain a 30% credit score in all three circumstances (Reference, Low Uptake, and Excessive Uptake) that phases all the way down to 0% in 2035.
Principal contributor: Stephanie Tsao
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