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Why SMALLER BUSINESSES Stand to get from the Inflation Reduction Act

Clean energy producers and green home remodeling companies stand to create big gains out from the Inflation Reduction Act that passed the Senate the other day, if it becomes law.

On the wholesale production side, one estimate assumeswe’ll see greater than a doubling of utility-scale “clean energy” production by 2030, and much more when compared to a tripling of wind, solar, and storage, specifically. Tax credits to consumers for green remodeling willjump from the one-time $500 creditto an annual $1,200 credit, allowing consumers to execute multiple upgrades over multiple years, and gaining the tax credits at each turn. These credits will subsidize purchases of the goods and services, and really should drive additional sales for companies offering them. And because of the annual component, it will drive sales for a long time ahead.

“Taxpayers can budget out different energy-efficient upgrades over a 10-year period. Insulation twelve months. Doors and windows another year,” Vincent Barnes, senior vice president of policy and research at the nonprofit Alliance to save lots of Energy in Washington, D.C., told The Wall Street Journal.

All told, those tax credits soon add up to $14.5 billion for that work. That’s along with “home energy rebates” that could further lower the price of specific consumer installation projects, like heat pumps. And tax credits for wind and solar installation get a supplementary bump of 10-20 percentwhen built-in certain low-income areas or on Native American lands.

Another area that stands to see big gains is manufacturing and recycling “green” equipment, with around $10 billion in credits. Included in these are equipment for renewable energy, energy storage, grid modernization, along with other key green technologies.

Throughout most of these programs, an integral innovation in the Inflation Reduction Act is transferrable credits for consumer purchases: Rather than having consumers pay the entire price up-front, and claiming the credit when filing their taxation statements, they are able to now transfer the credit to some other company–such as a manufacturer or installer, or perhaps a financing company dealing with them–creating an instantaneous discount that’s more likely to drive sales. However, that transfer could be committed only one time, meaning that an organization that buys plenty of credits from its customers could end up getting plenty of loans and little cash. So companies selling having an advance payment on the transfer will have to make certain they’ve established the proper credit facilities, lender relationships, and cash-flow operations to see them through.

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