The Infrastructure Investment and Jobs Act at One Year: Where Are We Now?
The historic Bipartisan Infrastructure Investment and Jobs Act (IIJA) was enacted into law one year ago. This major victory for Americans was the largest investment in clean energy infrastructure in American history (until passage of the Inflation Reduction Act of 2022) and set us on a path to make unprecedented investments to modernize and enhance the nation’s electrical grid.
Paired with the Inflation Reduction Act, the IIJA provides the policy foundation for the clean energy industry to begin rapidly developing and scaling projects across the country. Along with significant regulatory changes, the $65 billion in new IIJA funding now being distributed across the country has the potential to transform the way we generate and deliver power in the United States.
But the federal government must continue to solidify guidance and make available federal dollars to ensure that the clean energy industry – and Americans who consume clean energy – feel the benefits promised by the IIJA.
As we look back at the year since the IIJA passed, here’s a recap of the legislation’s impact on the clean energy sectors thus far and ACP’s recommendations for future implementation:
While the rapid buildout of transmission is critical for the energy transition, transmission infrastructure has been difficult to build in the United States because of lengthy permitting processes. The transmission-specific provisions in the IIJA are poised to provide support for this critical industry by:
- increasing resilience and reliability of existing transmission lines
- supporting the construction of interstate transmission lines
- assisting with planning and permitting challenges
- resolving disputes between states that enable nationally significant projects to proceed
In January, consistent with new funding and regulatory authority in the IIJA, the U.S. Department of Energy (DOE) launched the Building a Better Grid Initiative – spearheaded by its new Grid Deployment Office – to encourage the development of high-capacity electric transmission lines. As part of that initiative, DOE released a Notice of Intent (NOI) that identifies programs to develop transmission as rapidly as possible, as well as NOIs on implementation of the $2.5 billion Transmission Facilitation Program (TFP) and joint implementation of $10.5 billion across three IIJA grant programs collectively termed the Grid Resiliency and Innovative Partnerships (GRIP) programs.
In November, the DOE issued its first funding announcements for the TFP and over $3 billion in GRIP grant funding – with the application process commencing this year, and awards issued in 2023.
ACP urges the DOE to continue to move quickly to unlock the full funding from the IIJA and ensure that these programs are used in conjunction with DOE’s other authorities to help get transmission development started in as many places as possible, as soon as possible.
The IIJA has earmarked significant funds for further investment in energy storage. These funds include $6 billion in grants from DOE’s Office of Energy Efficiency and Renewable Energy for processing, manufacturing and recycling battery materials, along with $505 million in grants or cooperative agreements from DOE’s Office of Clean Energy Demonstration to carry out energy storage demonstration projects. This October, $2.8 billion of these funds were awarded.
Energy storage is having its best year on record, with installations at the end of the third quarter of 2022 already nearly even with total capacity in 2021. Now that the storage industry has access to a federal investment tax credit (ITC) for the first time ever thanks to the Inflation Reduction Act, battery storage installations are projected to exceed 10 gigawatts (GW) per year for the foreseeable future.
To ensure the steady build out of supply chains that support rapidly-growing energy storage deployment, the Administration must provide timely guidance on IRA tax credit provisions, including for the new energy storage ITC. Additionally, to ensure the full benefits of the IIJA, the Administration must ensure that future grants for battery manufacturing include a diversity of technologies appropriate for grid energy storage, including both lithium- and non-lithium-based batteries and their components. Lastly, ACP encourages Congress to double the appropriations for energy storage demonstrations and early deployments, particularly in resilience applications.
Solar & Wind
The IIJA expanded funding for new research and recycling projects in both wind and solar, and provided additional funding for solar manufacturing research and development (R&D). Federal funding for R&D can reduce costs and barriers to clean energy technologies.
This year, DOE has announced funding opportunities that include $29 million for R&D of the solar supply chain, $27 million for solar manufacturing R&D, $8 million for funding bat-deterrent technology development, and $8 million for solar agrivoltaic research. Without certainty on policy and tax issues, however, the development of these projects will continue to experience delays.
To ensure the steady build out of wind and solar projects and avoid closures of existing American factories, the Administration must provide timely guidance on IRA tax credit provisions and the DOE must move forward with the announced funding opportunities, continuing to unlock the full funding under the IIJA.
The offshore wind industry will benefit from three provisions specific to the industry in the IIJA with increased funding for vessels, port grants, and regulatory authority to allow for energy storage on the Outer Continental Shelf (OCS).
Offshore wind projects face a shortage of specialized vessels, as each project will utilize over 25 different types of vessels. The DOE expanded the Advanced Technology Vehicles Manufacturing Loan Program to include marine vessels, creating a lending authority of $17.7 billion that could help build low-emission offshore wind vessels by offering loans at low interest rates. Although this program is unlikely to help build the largest construction vessels, it could likely help vessels such as Crew Transfer Vessels and Service Operation Vessels.
Few American ports are ready to develop offshore wind, so increased funding in the IIJA for the Maritime Administration’s Port Infrastructure Development Program (PIDP) could help grow offshore wind ports. Ports need investments in heavy-duty wharves, lay-down areas, manufacturing facilities, dredging, and other improvements before they can serve as staging areas for offshore wind projects. The Biden administration should prioritize port development for offshore wind projects when reviewing grant applications to ensure ports are ready to serve the administration’s goal of deploying 30 GW of offshore wind by 2030.
The IIJA clarifies that storage of energy other than oil and gas can occur on the OCS. This forward-leaning clarification would allow for potential development of hydrogen production and storage by offshore wind turbines on the OCS.
The IIJA provided unprecedented funding for clean hydrogen projects. With $8 billion set aside for clean hydrogen hubs, $1 billion for a clean hydrogen electrolysis program, $500 million for clean hydrogen manufacturing and recycling, and a requirement for DOE to define “clean hydrogen,” the IIJA set the stage for the U.S. to enter the nascent clean hydrogen global market.
DOE has moved each of these initiatives forward, recently requesting information on a definition of clean hydrogen that would align with the statutory mandates in both the IIJA and the new tax credits in Section 45V of the IRA. In addition, DOE announced the first round of funding for clean hydrogen hubs, of which zero-carbon hydrogen must make up at least two projects. DOE also has requested information on clean hydrogen electrolyzer manufacturing.
To empower the emerging clean hydrogen market and provide certainty for developers, DOE must continue its efforts in finalizing a definition of clean hydrogen that can also be applied in the context of the IRA’s section 45V hydrogen tax credit. This includes working with stakeholders to ensure that clean hydrogen is defined in a way that is workable within the emerging clean hydrogen market, while also consistent with the goal of lowering carbon emissions.
One year later, the IIJA is poised to advance the American clean energy transition and the Biden administration has taken many steps to operationalize the provisions. ACP urges the DOE and the Biden Administration to continue moving rapidly to finalize guidance and unlock the remaining critical funds that will help the industry rapidly deploy affordable and reliable clean energy to Americans across the country.