Welcome to this week’s energy news roundup! Today, we’ll talk about how the recently passed Inflation Reduction Act is helping to accelerate domestic battery manufacturing and we’ll discuss how far we’ve progressed towards a renewable energy transition.
Domestic battery manufacturing strengthens
In August 2022, the Biden administration passed the Inflation Reduction Act, the largest investment in clean energy to date. The bill included a $7,500 tax credit for new electric vehicles (EVs) with some big caveats: starting now, all qualifying EVs must be assembled in North America. In 2024, at least 40 percent of the materials used in your EV’s battery must come from the U.S. or one of our trade allies and, in 2029, this percentage will jump to 100! The provisions are built in to encourage more EV development in the United States as a way of strengthening supply chains, increasing energy independence, and contributing to clean energy job growth.
So far, companies have responded the way the U.S. government hoped: there’s currently over $40 billion in planned investments towards battery manufacturing facilities (also called gigafactories). Current manufacturers produce about 100 gigawatt-hours of battery capacity each year (equating to about 10,000 to 20,000 EVs) – this number is expected to double in the next two years and could be up to 10 times higher by 2030, according to reporting by Climatewire.
The world progresses towards the clean energy transition
According to BloombergNEF, 87 countries currently power at least five percent of their electricity with wind and solar – the U.S. is currently at 20 percent renewable electricity and could reach 50 percent by 2032 based on current trends. BloombergNEF’s research suggests that these countries have reached a tipping point, meaning that “[e]very time the global supply of solar doubles, the cost of adding more installations declines by almost 30%” – soon, this will lead to renewable energy becoming the cheapest source of new electricity. However, in order to take full advantage of this inexpensive electricity, countries need to encourage and support electrification: electricity will be generated by renewable sources and stored by massive massive battery facilities; we’ll drive EVs powered by this electricity and we’ll heat and cool our homes with it as well using heat pumps.