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Post-IRA Boom: An Upbeat Outlook for the Renewable Energy Industry

The energy sector remains optimistic and is swiftly transitioning towards clean energy, despite facing obstacles such as interconnection delays, supply chain disruptions, and transmission bottlenecks. This positive outcome can be attributed to a range of favorable state and federal policies such as the Inflation Reduction Act (IRA) in the US, along with corporate commitments and other socio-economic factors. The urgency in curbing greenhouse gas (GHG) emissions has further propelled this positive transition.

Per a 2023, IEA-PVPS report on global PV market, the global PV base has grown significantly in 2022. According to preliminary market data, the cumulative capacity reached 1,185 GW (≈ 1.2 TW) and at least 240 GW of PV systems were commissioned throughout the world. Based on the last three years of data, solar is now a mainstream energy source. In 2022, despite being only 2/3rd of the new capacity, PV-Solar contributed approximately 50% of the electricity that was generated by renewable resources.

Power generation plants produce the second largest share of GHG emissions (approx. 25% of 2020 GHG emissions). PV-Solar power generation has helped curtail the CO2 emissions (30% more than 2021) from the electricity generation in 2022. This is approximately 1,399 Mt less annual CO2 emissions worldwide. While US emissions grew in 2022 by 0.8% the annual growth was much slower than 2021, but it’s still a deviation from previous declining trends.

IRA provided optimism for the PV-Solar industry and manufacturers started expanding operations in the US. From the signing of IRA into law in August 2022, to March 31, 2023, PV-Solar projects accounted for 56.5% out of a total capacity of 96 GW from the 46 new clean energy manufacturing facilities that were announced.

The American Clean Power (ACP) report "Clean Energy Investing in America," which was released in April 2023, highlights signs of rapid growth in the American clean energy industries. In the past eight months alone, capital investments exceeding $150 billion have been announced for domestic utility-scale clean energy. Furthermore, the renewable energy industry is set to benefit from the announcement of forty-six new clean energy manufacturing facilities, which are expected to create over 18,000 new jobs. Of these facilities, twenty-six are solar manufacturing facilities, ten are utility-scale battery storage manufacturing facilities, eight are wind power manufacturing facilities, and two are offshore wind power manufacturing facilities. Utility companies are incentivized to invest in utility-scale wind, solar, and storage projects, as well as manufacturing facilities, and encouraged to pass on $4.4 billion in savings to American customers.

The Inflation Reduction Act (IRA) includes two key provisions that are expected to incentivize equipment manufacturers:

  1. Advanced Manufacturing Production Credits (AMPC) for renewable equipment manufactured in the US.
  2. Domestic Content Requirement (DCR) that encourages developers of US renewable projects to purchase domestically produced equipment by offering an additional tax credit if they meet DCR thresholds. Projects installed before 2025 must source 40% (20% for offshore wind) of all equipment in the US to qualify. This threshold increases to 55% after 2026 (2027 for offshore wind). Furthermore, 100% of steel and iron construction materials must be manufactured in the US.

When these provisions are combined, they create a significant boost for US renewable equipment manufacturers.

2023 is set to deliver more certainty on the extent to which the IRA will uplift project economics. The utility-scale solar industry is expected to show more resilience to supply chain challenges through domestic module procurement. The industry is expected to move to more reliable renewable projects by adding a storage component. The Battery Energy Storage System (BESS) solution is seen as a reliable resource to facilitate required stability for Variable Renewable Energy Sources (VRES), which depend on sun, clouds, or wind, and BESS will help achieve optimal utilization during times of over production by VRES (typically during peak season), which otherwise would be wasted due to utility enforced curtailments. Wood Mackenzie forecasts 59.2 GW of energy storage capacity to be added through 2026. Due to tax incentives under IRA the annual storage installation in the US is expected to increase to >27GW by 2031.

The storage market is expected to grow as renewables deployment increases toward a net-zero future. Growing opportunities will contribute to additional industry challenges and continued technology changes. Reevaluating business models and use cases as well as continuous policy evolution will be required to facilitate storage that will become an integral part of the power systems.

IRA is expected to play a crucial role for US PV-Solar development and domestic manufacturing in 2023. With the evolving policy changes and decisions, significant new technology R&D, and the fast-moving global markets, 2023 will amount to another important year for renewable energy and energy storage, especially BESS. Is your team ready for the surge?


For the success of a project it is important to be able to comply with the advancing policy changes via custom control logic and/or schemes. Nor-Cal’s team has experience and expertise in providing custom on-site SCADA system solutions including historian, PPC/EMS/MPC with custom control schemes, and Field Network Communication Enclosures to meet your specific project requirements. We can also provide our preconfigured TAHOETM meteorological stations with a custom selection of sensors and a datalogger. Please contact us to discuss the requirements of your existing or upcoming PV-Solar, PV-Solar + BESS or BESS only projects.

Nashvinder Singh

Written by Nashvinder Singh

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