What Does the #IRA Mean for the Next Phase of Energy Storage?
Dive into how the Inflation Reduction Act may drive a revolution in energy storage, featuring insights from CleanTech Strategies President Russ Weed.
Welcome to #ShortStorage, our new series of short recaps of our podcast, Beyond Lithium. In each edition, we’ll highlight the trailblazers at the forefront of finding alternatives to lithium, focusing on cutting-edge energy storage solutions. Here, we recap our episodes 2 and 3 – a two-part sit-down with CleanTech Strategies LLC founder Russ Weed.
The Inflation Reduction Act (IRA) has garnered significant attention for its sweeping impacts on the U.S. economy, but how exactly will it revolutionize energy storage? To shed light on this critical aspect, we turned to Russ Weed, president of CleanTech Strategies.
Weed’s firm specializes in advancing clean technology initiatives by providing strategic consulting, business development, and market analysis. They work with clients such as Stryten Energy (lead, lithium, and vanadium flow batteries), Invinity Energy Systems (vanadium flow batteries), CMBlu Energy (organic SolidFlow batteries), HOTSTART (heating manufacture and integration), Inlyte Energy (sodium metal halide grid batteries) Advanced Rail Energy Systems ARES North America (gravity-based energy storage), EarthEn Energy (thermo-mechanical energy storage), the US research institution Sandia National Laboratories, and more. With a deep understanding of energy storage, microgrid controllers, and renewable energy solutions, Weed has a unique on-the-ground view of how legislation like the IRA can translate into cleantech growth.
Here are two of his observations from our conversation on what the IRA may mean for energy storage.
New Standalone Incentives
Weed emphasizes that the IRA is a landmark shift in U.S. energy policy, particularly through the introduction of investment tax credits (ITC) for standalone energy storage. Prior to the IRA, energy storage systems had to be paired with renewable energy sources to qualify for ITC, limiting their growth. Now, standalone storage systems and microgrid controllers are eligible for these credits, unlocking significant financial incentives for the sector. Per Weed, approximately $150 billion of the IRA is allocated to clean energy, potentially supporting up to $500 billion in projects when leveraging the ITC.
It’s important to note that in addition to the IRA’s Investment Tax Credits (ITC) for standalone energy storage, Production Tax Credits (PTCs) further boost renewable energy projects by offering ongoing incentives for domestic clean energy production. Alongside the IRA, the Bipartisan Infrastructure Law (BIL) channels $1.2 trillion into modernizing infrastructure and enhancing grid resilience, which includes last week’s announcement by the U.S. Department of Energy (DOE) earmarking over $3 billion for 25 selected projects across 14 states, while the CHIPS Act invests $280 billion in semiconductor production and technological advancement, all part of the Biden-Harris Administration’s Investing in America agenda. This positions them as key players in revitalizing U.S. infrastructure and advancing scientific innovation by bringing billions into clean energy, strengthening grid resilience, and driving the development of cutting-edge technologies. Together, these policies mark a historic shift in U.S. energy and technology investment, driving large-scale progress in sustainability and infrastructure modernization.
Financial Pathway to Move Beyond Lithium – Good for Any Duration
Answering short, medium, long, and seasonal energy storage demands is essential for reducing emissions and meeting the U.S. goal of a 40% reduction by 2030. But while lithium-ion batteries excel in short-duration applications (0-4 hours), they face significant challenges in large-scale applications, such as degradation and flammability.
Weed points out that the IRA's support for standalone storage solutions provides new opportunities – and creates a renewed focus – on overcoming the limitations of conventional batteries, especially lithium-ion. The influx of funding from the IRA is set to address these gaps by stimulating markets for clean energy technologies, making projects more bankable and driving technological progress. The IRA’s support is not only accelerating the adoption of renewable energy and storage solutions but also fostering a market environment where advancements in medium and long-duration storage can thrive.
For additional reading on the IRA’s implications, we recommend this great overview from McKinsey.
