Two years in, US clean energy manufacturing boom is still going strong

A sodium battery plant in North Carolina, a solar panel manufacturing facility in New Mexico, and a factory building electric sports cars in Virginia are among the $2.4 billion worth of new U.S. clean energy manufacturing projects announced in August. These investments are just the latest in the ongoing, multibillion-dollar wave of clean energy manufacturing activity spurred by the Inflation Reduction Act.

A major goal of the legislation, enacted in August 2022, is to build a U.S. clean-tech manufacturing base so that the energy transition not only achieves climate goals but benefits American workers as well. By bringing the clean energy supply chain onto U.S. soil, the Biden administration also seeks to lessen dependence on technology imported from foreign countries such as China.

Early signs indicate that the law’s clean energy tax incentives are working to build back American manufacturing, though experts say there is still a long road ahead before the U.S. can meet its climate goals without relying on imports.

“We have years and years of additional work and additional jobs that are going to be created,” said Michael Timberlake, communications director for E2, a lobbying group working to pair the interests of the economy and the environment. Each month since the IRA passed, at least $2 billion to $3 billion of new investments has been typical, in what Timberlake called ​“the new normal.”

Since the law went into effect, private companies have announced a total of more than $115 billion in investments for hundreds of domestic manufacturing facilities creating solar and wind energy components, batteries, and electric vehicles, according to new figures from E2 and the research firm Energy Innovation.

Those billions in investments have translated to job creation. In 2023, more than 42,000 jobs were created in the manufacturing sector for clean energy and electric vehicles, according to an E2 report.

Many more clean energy manufacturing facilities — and jobs — should be active within a few years.

Twenty of the largest manufacturing projects announced since August 2022 are on track to be completed by 2028, with more than half set to be completed before the end of 2026, according to an analysis by Jack Conness, a policy analyst with Energy Innovation who has built a dashboard tracking IRA-related investments.

“You can’t turn a billion-dollar factory on overnight. The scale of these projects is massive,” Conness told Canary Media, but he added that progress has moved fairly quickly, with several facilities already churning out new solar panels in Texas and Georgia.

The IRA provides generous incentives to firms that make clean energy technology. Qualifying manufacturers can receive a direct payment from the U.S. government to cover a portion of their upfront investment, or they can receive a smaller amount per product that they produce on U.S. soil.

Additionally, the IRA has helped create more demand for their products. Energy companies that use U.S.-made components for new wind or solar installations qualify for an extra tax credit. Consumers can get up to $7,500 toward new domestically manufactured EVs. The IRA tax credits will last until at least the end of 2032.

”That gives the private market an incredible decade-long opportunity to invest in a clean energy future,” Conness said.

It is unclear how many of the projects announced in the past two years will ultimately clear the hurdles to qualify for the various tax credits; the Treasury Department has had to issue complex guidance on each type of tax credit and typically scrutinizes applicants looking to take advantage. However, as evidenced by the rush of investments, companies are not waiting around for guarantees.

Electric vehicle and battery makers have been the most enthusiastic investors so far, though some warning lights are flashing for the industry. Several automakers, including Toyota and Ford, recently scaled back their goals for electric vehicle production.

“If automakers take advantage of these programs and produce electric vehicles instead of backsliding on their commitments, we will push ahead as leaders of the green transition,” said Abhilasha Bhola, a campaign director focused on the automobile industry for consumer advocacy group Public Citizen.

At this point, the automakers have not significantly cut back planned investments in new U.S. factories, but cancellations of new factories sometimes occur. In August, German solar manufacturer Meyer Burger axed plans for a new plant in Colorado and expansion of a facility in Arizona.

Despite possible bumps in the road, Timberlake said that ​“project cancellations or significant downsizing are rare.” In the two years E2 has spent tracking investments, he said there may have been one downsizing or cancellation every three months, but more often the group is adding project announcements that it initially missed.

Timberlake said the investments are not yet enough to guarantee that the U.S. meets its climate targets, but he sees the situation as a glass half full. ​“The trends are absolutely encouraging,” he said.