How Will the IRA Affect US Renewable Energy Manufacturing?
Jan. 24, 2023
Wood Mackenzie’s new report looks at how the Inflation Reduction Act with influence investment in renewable energy manufacturing.
According to the report from Wood Mackenzie, investment in renewables will rise from $64 billion in 2022 to nearly $114 billion by 2031 because of last year's Inflation Reduction Act. With the final ruling expected in May, domestic manufacturing could become more cost competitive.
But the U.S. is far behind China; according to the report, how fast the U.S. ramps up manufacturing depends on the cost of domestic manufacturing compared with imports, considering the benefits of the tax credits, and the expected supply/demand imbalance for renewables equipment.
“It’s fair to assume supply chain disruptions will continue for a while. Domestic manufacturing currently supplies a small fraction of forecasted average demand to 2031,” Daniel Liu, principal analyst at Wood Mackenzie, told Microgrid Knowledge.
