How will the Inflation Reduction Act create any opportunities for fleet operators looking to electrify their vehicles?
There is a lot to be excited about in the Inflation Reduction Act (IRA) for fleet operators looking to electrify their fleets. The incentives baked into the IRA really fall into two categories: The first are incentives that are designed for the vehicles themselves and the chargers to increase adoption on that side. Second are the incentives designed to increase the proliferation of solar and storage, which are the energy resources needed to fuel these vehicles.
The first category is one where fleet operators can look forward to a commercial EV tax credit of up to 30% or $40,000 per vehicle. That’s really substantial! That’s going to pull in the total cost of ownership and the speed at which fleet operators can electrify their fleets.
There’s also an expansion of the existing tax credit for EV charging. So now that fleet operators have to build charging for those vehicles, they can look forward to 30% of their charging infrastructure per charger up to $100,000 and 20% of their charging infrastructure above that as a tax credit as well.
That’s really a significant change because it’ll allow fleet operators to get tax credits on some of the more expensive DC fast chargers, which are often needed in order to electrify some of the heavier vehicle trucks and last-mile delivery vans. Just having that flexibility of having some really fast, high-powered DC charging in their fleet is a key tool.
We also have some other ecosystem help: $3 billion to the US Post Office to electrify; $2 billion for local states and tribal lands, cities, and municipalities to electrify their fleets; and other tax incentives for building US-based manufacturing of EVs, EV chargers, solar panels, and batteries. So all that US manufacturing will help drive down and stabilize prices. But, it will also just as importantly bring the supply chains a little bit more under control and the time in which we can expect delivery of our products. Supply chain stability can be just as important as price stability. So, we look forward to that on the manufacturing side.
We’re also really excited to see the second category of incentives, the ones for solar and storage that are going to be used to charge these EVs. There’s a 30% solar tax credit and a direct pay option. Now tax-free entities like cities, municipalities, and nonprofit entities (i.e., electric cooperatives) can all avail themselves of that tax credit because of the direct pay option. So they can build solar or storage and get that same 30% tax credit. There are additional incentives on top of that for domestic manufacturing and labor. The expectation really here is that storage projects will get built – not just attached to solar – but we’ll see more standalone storage projects and more storage attached to EV charging.
Why should fleet operators consider attaching energy storage to their EV charging?
Attaching storage to EV charging enables controlling utility bill impacts of that EV charging station. It also allows your EV charging to continue during a blackout – i.e., if the grid is down and your trucks need to keep rolling, then your battery can be the backbone of a microgrid and help keep that EV charging infrastructure working. There is an ability to charge your fleet from the sun – i.e., if your vehicles are out during the day when the sun is shining, the battery collects the solar, and you can do solar charging to charge your fleet from the sun. There’s also an ability to deal with grid congestion – i.e., if you need higher power fleet charging at a given location than what’s available from the utility, you can actually have higher power fleet charging available for peak times than the grid connection would otherwise allow, when you add energy storage.
These are the reasons why we’ll see increased attachment of energy storage to EV charging and how the Inflation Reduction Act increases that, pulling the EV trend forward.
We’re glad to talk with you about your projects. If you have projects and you’re considering pairing distributed clean energy resources with EV charging, please come talk to us!
Disclaimer: This content is preliminary and is provided for informational and planning purposes only regarding the Inflation Reduction Act. This does not constitute legal, tax, regulatory, policy, or other advice or guidance. The provisions in legislative bill text require further clarification and guidance by executive branch, regulatory, and other agencies.
