Modeling the Inflation Reduction Act
Spreadsheet nerds unite
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We've spent a couple of weeks modeling the impact of the Inflation Reduction Act (IRA) on U.S. power capacity and generation through 2031
Electric vehicle (EV) growth was modeled to incorporate incremental transportation power demand and to measure the impact on gasoline and diesel demand
Emissions from coal and natural gas power were estimated
Electric vehicle (EV) growth was modeled to incorporate incremental transportation power demand and to measure the impact on gasoline and diesel demand
Emissions from coal and natural gas power were estimated
High Level Summary
Building a comprehensive U.S. power market model is no small challenge, but we think we've built something data intensive, robust and user friendly to sensitize renewable capacity and generation tied to the IRA spending forecast.
Some high level thoughts on model outputs assuming full-spend of IRA dollars:
- Renewable generation growth is substantial, up over 100% from 2022 to 2031
- Utility-scale solar growth is 2-3x that of wind
- Coal and natural gas lose share, with a combined 30-35% drop
- Natural gas power demand growth or loss is highly dependent level of IRA spending - sensitizing IRA subsidies lower by 10-15% versus the baseline budget results in natural gas demand growth of 1% versus a 5% loss over the forecast period
- Think of restraining the spending in our model as an equivalency to transmission congestion limiting real-world projects
- 'Low-carbon' generation (renewables + nukes) account for 63% of U.S. power generation in 2031 compared to 41% in 2022
- Despite the EV fleet exceeding 20 million, power demand from EV transportation is largely immaterial at under 2% of total U.S. generation
- Natural gas demand continues to grow despite power generation losses due to LNG exports
- Coal CO2-equivalent emissions are down 70% by 2031; natural gas emissions are lower by 16%
We'll have many more scenarios and takeaways in upcoming work. For now, modeled changes in U.S. generation assuming full spend of the IRA budget are provided.
We think this one almost looks like artwork. As always, the charts are interactive on hover.
We have big plans on some upcoming projects and data sets. Please share our work far and wide.
