Renewable energy a strategic driver, enabled by tax credits

Inflation Reduction Act adds incentives to a growing sector

Energy giants, private equity, and other investors have been investing heavily in renewable energy production and related industries in recent years. The U.S. Energy Information Administration predicts that wind and solar sources will contribute 16% of total electricity generation in the United States by 2023, up from 8% in 2018.

Renewable energy tax credits are expected to further strengthen the commitment that many businesses have already shown to this sector, according to Adam Bowen, the Managing Director for Growth Advisory Services at Grant Thornton.

Grant Thornton webcast on renewable energy

During a recent Grant Thornton webcast on renewable energy, Bowen stated that people are now viewing energy as a source of opportunity rather than just a cost of doing business.

The U.S. government has provided hundreds of billions of dollars in renewable energy tax credits through the Inflation Reduction Act of 2022 and other incentive programs. These credits have transformed experimental spending on emerging technologies into an interconnected ecosystem that spans across sectors. It is not just about deploying solar panels; there is also significant interest in energy storage, transmission, and efficiency, offering financial opportunities for businesses in various industries.

“No matter where you are in your decarbonization journey, one thing’s for sure,” Bowen said. “Companies are always looking for ways to lower costs, improve reliability and resilience, and accelerate through the use of digital solutions and distributed energy resources.”

Opportunities in the renewables industry

Looking beyond energy generation, there are numerous opportunities within the renewables industry that should be considered. These sectors enable the widespread adoption of renewable energy, improve efficiency, and develop innovative technologies for a sustainable future. They include:

1. Sustainable construction: Wind turbines and other clean energy infrastructure items need to be built.
2. Energy storage: Batteries, capacitors, and other energy storage products need to be manufactured and distributed.
3. Electric vehicle (EV) manufacturing: The transition to electric transportation relies on the development and manufacturing of EVs, including cars, buses, trucks, and bicycles.
4. Smart grid and energy management: Renewable energy integration requires efficient grid management and energy distribution systems. The development and implementation of smart grid technologies, energy management software, and demand response systems enable renewable energy generation and consumption.
5. Solar panel manufacturing: The production of solar panels, including photovoltaic cells, modules, and associated components, is a significant driver of renewable energy projects. The declining cost of solar panels makes solar energy a more affordable and attractive option for residential, commercial, and utility-scale applications.
6. Hydrogen production and fuel cells: Companies involved in hydrogen production through electrolysis or other methods, as well as fuel cell manufacturing, are experiencing growth.
7. Environmental consulting and services: Services addressing environmental impact, regulatory compliance, and wildlife protection are crucial in ensuring that renewable energy projects are implemented responsibly.

These sectors together form an efficient, interconnected, and profitable renewable ecosystem. Significant commercial gains are expected not only for the first and fastest movers but also for well-established companies and organizations focused on maintaining relevance into the future.

SDGs, Targets, and Indicators

1. SDGs Addressed or Connected to the Issues Highlighted in the Article:

   • SDG 7: Affordable and Clean Energy
   • SDG 9: Industry, Innovation, and Infrastructure
   • SDG 11: Sustainable Cities and Communities
   • SDG 12: Responsible Consumption and Production
   • SDG 13: Climate Action
   • SDG 15: Life on Land

2. Specific Targets Based on the Article’s Content:

   • Target 7.2: Increase substantially the share of renewable energy in the global energy mix
   • Target 9.4: Upgrade infrastructure and retrofit industries to make them sustainable
   • Target 11.6: Reduce the adverse per capita environmental impact of cities, including by paying special attention to air quality and municipal and other waste management
   • Target 12.2: Achieve sustainable management and efficient use of natural resources
   • Target 13.2: Integrate climate change measures into national policies, strategies, and planning
   • Target 15.2: Promote the implementation of sustainable management of all types of forests, halt deforestation, restore degraded forests, and substantially increase afforestation and reforestation globally

3. Indicators Mentioned or Implied in the Article:

   • Indicator 7.2.1: Renewable energy share in the total final energy consumption
   • Indicator 9.4.1: CO2 emission per unit of value added
   • Indicator 11.6.2: Annual mean levels of fine particulate matter (e.g., PM2.5) in cities
   • Indicator 12.2.1: Material footprint, material footprint per capita, and material footprint per GDP
   • Indicator 13.2.1: Number of countries that have communicated the establishment or operationalization of an integrated policy/strategy/plan that increases their ability to adapt to the adverse impacts of climate change, and foster climate resilience and low greenhouse gas emissions development in a manner that does not threaten food production
   • Indicator 15.2.1: Progress towards sustainable forest management

Table: SDGs, Targets, and Indicators

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Source: grantthornton.com

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