It is no secret that our infrastructure is worn to the ground. The dramatic list of failures of the nation’s critical infrastructure is growing, and over the last few decades, many have tried to table new investments in critical infrastructure without success. However, last November, due to the growing concern over our crumbling infrastructure, a historic, bipartisan one-trillion-dollar infrastructure bill was passed by the senate.
While Republicans and Democrats do not agree on much, both understand the basic need to be able to drive over bridges that do not collapse and to have electricity available during freezing winter storms. Among many other industries, the new infrastructure bill will be a major stimulus for an already booming solar industry. What follows are the three largest ways the bill will be beneficial to solar energy investors and solar investment projects.
The bill has allocated $11.6 billion for funding technology to improve the resiliency, reliability, and flexibility of the nation’s power grid. One of the major issues with solar development has been how the grid accounts for the variable energy that flows heavily when the sun is shining and is non-existent at night. With solutions on the horizon like improved storage and many other energy sources on the grid, it’s critical that we develop a more resilient grid. This type of investment will reduce the interconnection costs which are currently impressed upon the developers and drive up costs, limiting the feasibility of solar projects.
Less Red-Tape for Transmission Development
Under the current policy, the FERC (Federal Energy Regulatory Commission) faces limited authority and must seek approval from the states on where and how they develop new transmission lines. The bill seeks to increase the FERC’s authority and flexibility to site and construct lines within National Interest Electric Transmission Corridors – areas deemed vital for national security interests. This flexibility will reduce the layers of necessary approvals, and decrease the time and cost to expand our transmission infrastructure, thereby paving the way for more solar projects on the grid.
There are also $7.5 billion allocated to developing electric vehicle charging stations. While not directly impacting solar development, this is a nod to the larger trend from gas-powered to electric vehicles. This will lead to an increase in overall demand for electricity versus fossil fuels, increasing the need for new energy production. With solar leading the way as the cheapest and cleanest option, it stands to reason that the industry will continue to trend up with electric vehicle adoption.
Aside from this infrastructure bill, the recent extension of the Solar Investment Tax Credit (ITC) of 26% through the end of 2022 continues to fuel private solar projects. Interconnection costs and grid constraints have been one of the biggest impediments to solar development, so expect a big win for the solar industry in the near future.