the view from heti

3 things to know about the IRA that impact Houston's energy sector

Here are three things to know about how the Inflation Reduction Act is driving a clear tech industrial revolution. Photo via energy.gov

In August of 2022, President Joe Biden signed into law the Inflation Reduction Act which aims to mitigate inflation by reducing the federal government budget deficit and lowering prescription drug prices. Through federal funding and a combination of grants, loans, rebates, incentives and other investments, the IRA also will impact domestic energy production while bolstering efforts for an energy-abundant, low-carbon future.

At the bill’s one-year anniversary, Mitsubishi Heavy Industries America held a panel of leaders across multiple sectors — energy, finance, industry and academia — to discuss the IRA and what it means for the future of business and industries.

Here are three things to know about how the Inflation Reduction Act is driving a clear tech industrial revolution, according to Mitsubishi Heavy Industries:

1. IRA Encourages Private-Sector Investment

Since being passed into law by President Biden in August of 2022, the IRA’s first year yielded:

  • Companies have announced 96 gigawatts of new clean power over the previous eight months, enough to power almost 20 million homes – about one-seventh the total number of homes in the U.S.
  • Companies have announced enough new U.S. battery manufacturing projects to support production of more than 10 million EVs per year – more vehicles than were manufactured in the U.S. in 2021.
  • The IRA’s expected impact on private investment has increased between 50 percent and 200 percent from initial estimates, based on research from the Brookings Institution and Rhodium Group, with the largest jumps related to hydrogen, carbon capture, energy storage and critical minerals.

2. A strong focus on environmental justice

According to a fact sheet issued by the White House, the IRA will: reduce pollution; improve clean transit; make clean energy more affordable and accessible; and strengthen resilience to climate change. With a simple mission to accelerate the energy transition with incentives rather than penalties, the act will allocate nearly $400 billion to efforts to reach a low-carbon, energy abundant future including:

  • More than 40 percent of the $27 billion Greenhouse Gas Reduction Fund ($10.8 billion) will benefit low-income and disadvantaged communities.
  • $3 billion for states, tribes, municipalities and community-based nonprofit organizations for environmental justice and climate justice block grants. Eligible activities include mitigating climate risks from heat islands and wood heater emissions, and reducing indoor air pollution; climate resiliency; and facilitating engagement of disadvantaged communities.
  • $3 billion to reduce air pollution and emissions at ports via the installation of zero-emissions equipment and technology.
  • $37.5 million in grants to monitor and reduce air pollution and greenhouse gas emissions at schools in low-income and disadvantaged communities along with another $12.5 million to provide technical assistance to help schools address environmental issues.
  • $33 million to the Council on Environmental Quality to collect data and track disproportionate impacts of pollution and climate change on environmental justice communities in addition to $3 million in grants to deploy, integrate and operate air quality sensors in low-income and disadvantaged communities

3. Collaboration reimagined

As the race to net zero continues, tech giants and energy leaders across all sectors ––corporations, governments, nonprofits and academia –– have come together for one common goal: develop solutions to tackle the world’s toughest energy issues. When it comes to progressing the IRA, industry and Mitsubishi President and CEO Takajiro Ishikawa weighed in on collaboration for the act noting that “The energy transition can’t be done by just one party. Collaboration and communication between all parties is key.”

------------

This article originally ran on the Greater Houston Partnership's Houston Energy Transition Initiative blog. HETI exists to support Houston's future as an energy leader. For more information about the Houston Energy Transition Initiative, EnergyCapitalHTX's presenting sponsor, visit htxenergytransition.org.

Trending News

A View From HETI

Al Vickers, XGS Energy's new COO, and Richard Chong, the company's new CFO. Photos courtesy XGS/LinkedIn

XGS Energy, a Houston-based developer of geothermal power systems, has added several energy industry veterans to its C-suite this summer.

The company named Al Vickers as its new chief operating officer earlier this month. Vickers will replace Ghazal Izadi in the role, as she moves into the chief growth officer position.

Vickers previously served as CEO of bp's U.S. Low Carbon Energy business and most recently was COO of Houston-based Grid United, which develops next-generation transmission infrastructure.

“I have spent my career developing, building, and operating large, complex energy infrastructure, and I am excited to work with XGS’s proven technology, which is ready to deliver clean, round-the-clock power at the scale the grid and customers need,” Vickers said in a news release. “XGS sits at the intersection of innovation, affordability, demand growth, responsible infrastructure development, and long-term energy resilience. I’m excited to roll up my sleeves and apply best practices from both oil and gas and infrastructure development to deliver gigawatt-scale geothermal projects.”

Kurt Fricker, who most recently held leadership roles at Hess Corporation, was also announced as XGS's new chief procurement officer.

The hires come shortly after XGS announced Richard Chong as its new chief financial officer in May.

Chong joins XGS from Houston-based power producer Calpine, where he most recently was vice president of finance. His work there included leading $2.25 billion in financing for Geysers, the world’s largest geothermal power complex.

Chong says XGS’ proven technology and the rising demand for clean power will help the company execute on its multi-gigawatt pipeline.

“I look forward to applying the experience I’ve built over two decades in energy finance to help XGS deliver clean, reliable power to customers and unlock the massive development opportunity ahead for next-generation geothermal,” Chong said in the release.

XGS’ first project is a 150-megawatt geothermal facility in New Mexico. It will supply around-the-clock electricity to the grid operated by Public Service Co. of New Mexico in support of Meta data centers.

XGS recently tapped Houston-based energy technology company Baker Hughes to provide engineering services for the New Mexico project.

XGS’ geothermal system uses thermally conductive materials to deliver affordable energy anywhere hot rock exists — without the need for water resources or specific geological conditions. This results in lower-risk projects, more site options, easier permitting and faster deployment.

Since 2023, XGS has raised nearly $57 million in venture capital.

XGS launched in 2008 in Palo Alto, California, as Geothermic Solution. In conjunction with its Series A round in 2023, the company rebranded to its current name. The company recently moved its headquarters to Houston, according to the Houston Business Journal.

Trending News