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Having actually read the draft of the Inflation Reduction Act I have the following thoughts

Doug Houseman's picture
Visionary and innovator in the utility industry and grid modernization Burns & McDonnell

I have a broad background in utilities and energy. I worked for Capgemini in the Energy Practice for more than 15 years. During that time I rose to the position of CTO of the 12,000 person...

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  • Aug 4, 2022
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1) We may see a reduction in buyers for solar and wind farms. With the 15% minimum tax for corporations the tax credits are going to have a smaller market, and likely the sale price will be less than it is now.

2) Foreign buyers who only have renewables in the US (Ontario Teachers Pension Fund) may find the tax credits of little or no value, and withdraw from the US market, selling off current assets, because of the lower profit from the facilities.

3) The expanded subsidies for electric vehicles may result in price increases from Tesla and others, mostly to offset increased battery prices. They may feel that the subsidies allow them to do so.

4) Higher income households may decide that without the subsidies and with the price difference, that an ICE vehicle is a better budget option.

5) Adding fuel cells (mostly for hydrogen) as a vehicle option may give license to construction and farming equipment makers to head in that direction, logistics are easier then grid electricity right now.

6) Requirement for prevailing wages in every case there are incentives, will increase costs for solar, wind, and other renewables.

7) With the chip bill having passed, look for other critical industries to hold out for similar corporate welfare, beyond what is in the IRA, citing similar issues that the chip makers have.

8) With earmarks allowed again, expect that the majority of this money is already allocated to specific communities, companies, or congressional districts. Don't expect large open competitions for the funds. Because this is a partisan bill expect most of the funds to flow to Democratic districts and states.

9) If (and there is no guarantee) this bill passes before the election, expect thousands of local press releases by congress members about new jobs, or new industries prior to the election and many TV ads.

10) With the exception of the Medicare portion, I find NOTHING in the bill that does anything to reduce inflation. Most of the subsidies are chasing items in short supply or trying to add jobs to areas where skilled people are in short supply. The education funds in the bill are laughably low compared to the needs driven by this bill.

11) Look for more companies to fully off-shore their headquarters and a few to look at listing in London instead of New York. Expect that more US subsidiaries will find they have even higher transfer prices from their parent, ensuring that they operate at a loss in the US.

These are my personal thoughts, your mileage will va

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