What the Inflation Reduction Act Means for Telecom

August 12, 2022

President Biden has passed the Inflation Reduction Act (IRA). The bill will create significant economic incentives across a range of industries, including the energy sector. This bill signals a sea change in the U.S.’s approach to renewable power and climate technology.

In Summary

The IRA will unlock roughly $369 billion in federal funding to promote clean energy technologies over the next 10 years.

The lion’s share of the new funding will come in the form of tax credits. The IRA extends the Investment Tax Credit (ITC), while also expanding the scope of eligible technologies to broadly subsidize the transition to clean energy generation and storage.

Eligibility Criteria

While wind and solar installations have been eligible for the ITC since 2006, the IRA will expand the ITC to include standalone energy storage systems. The tax credits will be available to any company subject to US federal income taxes, so long as a system has at least 5 kWh of storage capacity and is located in the US or US territories.

These incentives have an end date- businesses must commence construction on projects by December 31, 2024 in order to qualify for the tax credits.

Financial Incentives

Tax credits of this magnitude are a significant incentive for businesses to decarbonize. The IRA will allow operators, carriers, and other asset owners to claim 30% of the total cost of an energy storage system as a credit against any federal income tax liability. By subsidizing the cost of renewable energy generation and storage, Telcos will be able to achieve their goals of reducing Scope 1 and Scope 2 emissions ahead of schedule and at a substantial discount to their previously budgeted cost.

How You Can Prepare

Designing and deploying energy management systems is time consuming, but there are steps you can take to accelerate the process and prepare for a rollout.

1. Start gathering site information (i.e. such as the number of sites, physical requirements, power needs, etc.)

2. Analyze energy consumption (i.e. how much is consumed at each site, determine peak consumption hours, etc.) so this information is readily available.

3. If you don’t have this information, consider partnering with an energy manager right away to support you in gathering and analyzing this information.

If you are interested in deploying energy storage systems, contact Caban Systems here to assess your options.

This is an exciting time for renewable energy, and I hope you can join me in helping transition our industry towards a sustainable future.

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Caban uniquely combines service, hardware, software, and finance to deliver reliable, clean power and boosts your bottom line. This turnkey approach allows you to work directly with one trusted ESG partner to achieve decarbonization across your operations.

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