A breakdown of the solar + storage impacts of the Inflation Reduction Act

On August 16, President Joe Biden signed the Inflation Reduction Act (IRA) into law. According to the White House “Briefing Room” page, it is sweeping legislation that promises to “lower costs for families, create good-paying jobs for workers, and grow the economy from the bottom up and the middle out.” It is also intended to tackle the climate crisis, with $369 billion earmarked for energy and climate spending; we wanted to provide a breakdown of the solar + storage impacts of the law.

Key clean energy impacts will be in the areas of creating clean energy jobs, building an American clean energy supply chain, offering tax credits for manufacturing and clean energy projects, and providing incentives for residential and commercial solar and storage installation as well as electric vehicles.

Another element of the IRA that we’re particularly excited about is the availability of direct pay for nonprofit and community organizations. This enables entities such as school systems, rural electric cooperatives, Native American tribes, units of state and local government, and others who are not eligible for tax credits to receive direct pay refunds for solar projects. This will almost certainly enable more organizations to afford and benefit from solar power.

Here is a run-down of the most critical elements of the IRA, from a clean energy standpoint:

Residential solar + storage:

  • The income tax credit (ITC) has been extended and raised (back) to 30%, with a step-down beginning in 2033, when it is slated to drop to 26%.
  • The ITC is also extended to stand-alone energy storage for batteries with at least 3 kWh of capacity.
  • There are also incentives and rebates for residential clean energy and efficiency upgrades.

Commercial solar + storage:

  • The ITC has been extended and lifted (back) to 30% for projects that have started or start construction before the end of 2024.
  • The ITC also makes the tax credit available to stand-alone storage.
  • There are several additional potential bonuses for projects that meet certain guidelines.

Nonprofits and community organizations:

  • Direct pay refunds will now be available for nonprofit entities, state or local governments, the Tennessee Valley Authority, rural electric cooperatives, or tribal governments.


  • Manufacturers can choose between a 30% ITC for eligible investment costs in facilities and equipment OR a manufacturing production credit for certain components, based on the volume of product manufactured.

Jobs creation:

  • According to a new analysis commissioned by the BlueGreen Alliance from the Political Economy Research Institute (PERI) at the University of Massachusetts Amherst, “the more than 100 climate, energy, and environmental investments in the Inflation Reduction Act will create more than 9 million jobs over the next decade” and “will also help sustain the millions of existing jobs in the clean economy.”

Other provisions:

  • $500 million for the Defense Production Act (some may be used for solar manufacturing)
  • $29 billion Greenhouse Gas Reduction Fund (to be overseen by the EPA)
  • $5 billion in Climate Pollution Reduction Grants
  • $3 billion for Environmental and Climate Justice Block Grants
  • $1 billion for rural renewable energy electrification loans and expansion of the program to include storage
  • Incentives for building out EV charging networks

Of course, a key goal of the legislation is to reduce greenhouse gases: the target is 40% below 2005 levels by 2030 (our current path is projected to get us only to 25%). Regardless of political affiliation, we hope that all who are concerned about increasingly extreme weather and the long-term viability of the planet – as well as those of us who work in the clean energy arena – will find something to be pleased about in the IRA!


OVERVIEW: Inflation Reduction Act: Solar Energy and Energy Storage Provisions Summary, Solar Energy Industries Association

PDF: Inflation Reduction Act: Solar Energy and Energy Storage Provisions Summary, Solar Energy Industries Association

Long-term ITC extension, standalone storage and direct pay: What’s in the IRA, Solar Power World

What the Inflation Reduction Act does for green energy, PBS

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