President Trump's Executive Order Freezing IRA Funding: How will it Impact Microgrids and DERs?
In the past four years, the Biden White House estimated and announced in its last full month in office, some $450 billion in new clean energy investments were awarded with the backing of the Infrastructure and Inflation Reduction Acts.
These include microgrids for the military, hospitals and commercial customers, as well as both utility-scale renewables and on-site distributed energy resources. This also followed the private infrastructure sector’s recommendation, such as the American Society of Civil Engineers estimating a $700 billion investment to adequately rebuild U.S. energy infrastructure.
But it’s worth noting that the White House website page which originally calculated that $450 billion investment is no longer found as it was taken offline. A new leader is in Washington and vowing to sweep away much of the energy transition funding approved under his predecessor.
That is not a political statement, but a political reality. The winner gets to choose what goes up there.
With that Constitutional power in hand, President Trump this week decreed a freeze on clean energy spending enacted within the infrastructure portion of the Inflation Reduction Act (IRA). Both acts were passed by Congress and signed into law several years ago, although the IRA margin was slender and included no Republican votes.
Trump’s Executive Order, titled “Unleashing American Energy,” promises to encourage domestic production of oil gas on federal lands, create a more reliable supply chain on rare earth minerals and promote “true consumer choice” by eliminating the so-called “electric vehicle (EV) mandate” providing incentives for producing and buying EVs.
The president’s executive order also seeks to sweep through any energy efficiency investment or favoring energy reduction technologies in the appliance marketplace.
Perhaps the biggest headline emerging from the EO, however, is revoking several of President Biden’s own orders, including the implementation of the Energy and Infrastructure provisions within the Inflation Reduction Act of 2022. The IRA implemented numerous tax credit and investment funding moves aimed squarely at clean energy technologies such as energy efficiency, renewable projects, microgrids, battery storage and hydrogen development.
It is truly not known what immediate impacts this new Trump EO will have on the microgrid and energy transition marketplace. Many projects have gone forward in development with both government and private investment in place. Can they be stopped cold? No one knows.
Previous MGK Coverage on Trump's Election Impact
Upset and Optimism in the Clean Energy Industry
We’re novices, at best, on legal theory but here’s a shot: The tax credits could be untouchable unless Congress revisits and repeals the IRA. Whether the IRA freeze can stop loans, grants and other incentives is something that only time and perhaps only the federal court system will work out.
It’s worth noting that many of the more recent distributed energy projects are being deployed in several red states, including Texas. Commercial microgrid development has grown 20-fold in the Lone Star State over the past decade or so.
We at Microgrid Knowledge and EnergyTech will continue to cover these developments as we learn more. We will keep you updated as these political battles impact microgrids and the commercial and industrial energy transitions.
