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

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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.”

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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.

How the IRA is affecting clean energy project development, events not to miss, and more things to know this week. Photo via Getty Images

3 things to know this week: Energy startups announce big wins, evaluating the IRA's first year, and more

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Editor's note: It's a new week — start it strong with three quick things to know in Houston's energy transition ecosystem. Three energy tech startups are celebrating big wins, experts evaluate the IRA's first year, and events not to miss this week.

Eyes on the IRA

How did the IRA affect energy transition project development? Experts discussed the positive impacts — as well as the challenges still to overcome. Photo courtesy of Renewable Energy Alliance Houston

August 16 marked one year of the Inflation Reduction Act's enactment, and many have taken this first anniversary as an opportunity to look back on its effectiveness and where it's fallen short.

For Carbon Clean, a United Kingdom-founded company, the IRA made all the difference in its expansion into the United States — by way of Houston.

"The impact of the IRA cannot be overstated for our industry, especially for point source carbon capture technology companies like Carbon Clean," Co-Founder, Chair, and CEO Aniruddha Sharma shares with EnergyCapital in an interview. "The momentum created by the law's passage, along with our existing activity in North America, led to the opening of our US headquarters in Houston in March this year. We will double our US headcount to meet demand for CycloneCC, our breakthrough, fully modular carbon capture technology."

At a recent event at Rice University, experts zeroed in on the effect on clean energy project development. While the IRA opened doors for new funding, it also revealed shortcomings when it came to permitting.

"The IRA for developers has been very positive. It provided certainty and allowed developers and investors alike to plan long term," says Omar Aboudaher, senior vice president of development for Leeward Renewable Energy. "With that comes challenges, including exacerbating some existing problems with permitting."

Energy tech startup wins

These three startups have something to celebrate. Photo via Getty Images

Three energy tech startups had some big wins last week — let's take a look.

Nauticus Robotics, a Houston-based tech company providing software and hardtech solutions for industrial and government entities, secured a $2.1 million contract extension with one of its biggest clients. Read more.
France-based Engie announced that it will acquire Houston-based battery storage startup Broad Reach Power in $1 billion deal. The company launched in 2019 with backing from EnCap Energy Transition, an arm of Houston-based private equity firm EnCap Investments. Read more.
Austin-based energy software company P6 Technologies closed a $3.25 million seed round of funding with support from a handful of Houston investors from GOOSE Capital, Artemis Energy Partners, Tupper Lake Partners, and Veritec Ventures. Read more.

Upcoming events to put on your radar

Mark your calendars. Photo via Getty Images

Plan the rest of your August accordingly.

August 28-30 — Industrial IMMERSIVE Week attracts the most industrial, energy, and engineering tech professionals making investment, strategy and tactical decisions, or building, scaling and executing pioneering XR/3D/Simulations, digital twin, reality capture, edge /spatial computing, AI/ML, connected workforce & IIoT projects within their enterprise.
August 30 — 2023 Energy Research Day will be a showcase of outstanding energy-related research by University of Houston graduate and postdoctoral students. Sponsored by the Division of Research and Graduate School, the event gives industries in the Greater Houston area a chance to see UH research up close and network with future collaborators.
August 30-31 — Carbon & ESG Strategies Conference, presented by Hart Energy, will highlight carbon capture and storage projects and technologies onshore and offshore, direct air capture, enhanced oil recovery, responsibly sourced gas, renewable natural gas, federal funding challenges and insurance issues, ESG initiatives, regulatory concerns and much more.

Houston's renewable energy community gathered to discuss the IRA's impact — and more trending news from the week. Photo courtesy of Renewable Energy Alliance Houston

Experts look back on IRA, Houston airports go green, and more trending news

Houston experts evaluate the impact of the IRA on cleantech project development

one year later

It's been officially a year since the Inflation Reduction Act was enacted, so it's no surprise that looking at the IRA's impact dominated the discussion at a recent industry event.

When looking at the IRA's impact, the experts identified a few key things. Here's what they said at the conference.

Going beyond tax credits and regulation

Greg Matlock, EY's global energy and resources industry tax leader, kicked off the IRA discussion after John Berger, CEO of Sunnova, gave a keynote address.

Matlock set the scene for the IRA, explaining that previous legislation incentivizing clean energy changes mostly stayed within regulation and tax credits. Credits as a tax policy fail to incentivize organizations that are, for various reasons, are tax exempt or are already paying insignificant taxes. The fundamental switch of the IRA was to a "want to" rather than a "have to."

"Everyone has had aspirations, but with aspirations without capital, it's hard to get movement," Matlock says. "But what the IRA did was create a liquidity in the market and added access to an investor base. Now you're pairing aspirations and capital, and now you're seeing movement in the market."

The IRA, Matlock continues, also got the ball rolling on expanding requirements for tax incentives. Previously, a specific technology has to be clearly identified to be qualified for a credit. Moving forward, the IRA improved this qualification process and in the future, there will be be technology neutral incentives.

One thing Matlock also highlighted was the limitations of tax credits — dollar for dollar credit.

"Two years ago, if you called an organization that was tax exempt (about) a project that generates tax credits, why would that want that?" Matlock says. "For the first time, you can sell federal tax credits — not all of them — for cash and tax free to businesses who are paying taxes."

Explaining that there are limitations, Matlock says this process had a significant impact encouraging movement in this space — especially from surprising sources.

"We're seeing companies that have absolutely no connectivity to our energy industry making investments through the purchase of tax credits to fund the development of projects," Matlock says.

A focus on carbon capture and hydrogen

Matlock continues to explain how carbon capture and hydrogen became two case studies for the impact of the IRA.

Prior to the IRA, over 16 countries incentivized hydrogen production, he explains, and the United States was not one of them.

"With the signing of the IRA, we went from the worst to the first," Matlock says.

Carbon capture development was directed more at traditional energy industries. The IRA enactment represented a switch for these companies from regulatory moves to incentivization, which has been more effective in general, Matlock says.

Over the past year, according to the American Clean Power Association, more than $271 billion in investment in clean energy projects has occurred since the IRA was enacted. When it comes to jobs, over 170,000 clean energy jobs have been announced since the IRA.

Problematic permitting and pricing volatility

In a subsequent panel, the three thought leaders looked at the IRA a bit more critically. While the IRA spurred momentum, it also shined a spotlight on some of the industry's challenges.

Aboudaher explains that the IRA-inspired burst of projects has caused a lot more permits for the increase of development. And, he adds, there's not a concentrated effort. It's happening in silos on the various levels of government.

"On the permitting side, there's a big need to streamline permitting," Aboudaher says. "In some parts of the country, it can take 6 to 10 years to permit your project."

On the investor side, it's also a problem, adds Fred Day, managing director of investments at Brookfield Asset Management.

"Even though we have this IRA, a lack of permitting reform does create a bottleneck," he says.

Another challenge is a disconnect between supply and demand. While the IRA has incentivized solar energy generation per hour of energy, meaning that its cheaper than ever to make energy via solar panels, there's not yet the demand infrastructure for this energy. This incentivization structure has already been in place for wind power.

"I think it's going to be a real problem. It's a real problem with wind today," Doug Moorehead, COO of Broad Reach Power, says, explaining that there's volatility in pricing. "When the wind is high, prices are really low. When wind is low, prices are high."

All of this is leading to an imbalance of market demand and supply, he continues. Jessica Adkins, partner at Sidley Austin LLP and moderator, adds that there's built in volatility for solar since solar energy is confined to the time of day when the sun is out.

"Any time you're incentivize to produce regardless of demand, it's going to be an issue," Moorehead says.

Aniruddha Sharma of Carbon Clean weighs in on his North American expansion, the impact of the Inflation Reduction Act, and more. Photo via carbonclean.com

Why this UK carbon capture co. expanded to Houston, IRA's impact, and more

Q&A

EnergyCapital: Looking back on the past year since the Inflation Reduction Act was enacted, what has the impact been on Carbon Clean?

Aniruddha Sharma: The IRA did much to jolt industry, incentivizing investment in carbon capture, while also telegraphing that the US government is getting serious about bringing emissions down. Overnight, the US became Carbon Clean's biggest growth opportunity: inquiries from industrial emitters leapt a staggering 64 percent.

The impact of the IRA cannot be overstated for our industry, especially for point source carbon capture technology companies like Carbon Clean. The momentum created by the law's passage, along with our existing activity in North America, led to the opening of our US headquarters in Houston in March this year. We will double our US headcount to meet demand for CycloneCC, our breakthrough, fully modular carbon capture technology.

EC: What does the sector still need to see — in terms of support from the government — to continue to move the needle on the energy transition?

AS: There's much to admire in the way that the IRA incentivizes business. While it involves billions of dollars of public investment, it is set up in such a way that companies must make substantial investments first. IRA funding doesn't arrive on day one — it comes over several years and to get to the first dollar of funding, a company must secure considerable private investment first. In other words, every single dollar of the IRA funding is unlocking additional private investment, creating high-paying jobs, and bringing manufacturing back home.

Of course, a lot of additional investment still needs to happen, and for some harder-to-abate sectors additional policy measures may be required to enable deployment at scale. The IRA is just a first step, but what a giant step it promises to be.

EC: You recently opened Carbon Clean's HQ in Houston. What's next for your company in terms of growth — especially here in Houston?

AS: We're experiencing phenomenal growth globally, but we expect our expansion in North America to outpace all other regions. In line with this, we've seen a surge in interest from industrials across the US and our newly-opened Houston office will help us to meet this demand.

We are establishing a very significant base in the US — doubling our headcount this year — and we are developing a local supply chain to support the commercialization of our breakthrough modular technology, CycloneCC.

The potential for CycloneCC in the US and Houston area is huge. It is optimised for low to medium scale industrial emitters and recent Rice University research on the US Gulf Coast, for example, found that it is well suited to 73% of Gulf Coast emitters.

We're currently working with Chevron on a carbon capture pilot for our CycloneCC technology on a gas turbine in San Joaquin Valley, California. We expect to be announcing additional carbon capture projects in the US in the coming months.

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This conversation has been edited for brevity and clarity.

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Houston-area plastics company debuts state-of-the-art headquarters

new hq

Ultra-high-performance plastics company Drake Plastics officially opened its new state-of-the-art, 140,000-square-foot manufacturing center and corporate office in Cypress last month.

Dubbed “Drake HQ, ” the new facility was built to align with Harris County’s clean energy goals and features a 1.3-megawatt solar generation plant designed to offset 50 percent of the plant’s power consumption.

The facility is designed as a “factory ranch,” and is intended to blend in with its natural surroundings. With the expanded campus, Drake says it looks to serve existing and new customers in the semiconductor, aerospace, energy and defense industries.

The new headquarters is designed as a "factory ranch" and features a solar generation plant to offset half of its power consumption. Photo via LinkedIn

“We are thrilled to open the doors of our new headquarters in the area where it all began,” Drake Plastics President Steven Quance said in a news release. “We are honored to have reinvested in the community that has supported our growth and success over the past three decades.”

Drake Plastics cut the ribbon on March 26 at the new facility, which also marked the company’s 30th anniversary in the Cypress area. The company launched in 1996 with four employees and has grown to employ more than 100 staff members, according to a LinkedIn post.

Drake Plastics is a globally recognized leader in ultra-high-performance polymer manufacturing and specializes in extrusion, injection molding, precision machining, machine building, engineering and distribution. According to the company, its new Cypress facilty is one of the largest in the world that processes these high-performance polymers.

Energy expert on powering Texas by leading globally and acting locally

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Texas is known around the world for shaping energy trends, including conservation efforts. As we reflect on Earth Day this month, let’s take a closer look at where Texas is getting things right and where there is still room for improvement.

Texas is the nation’s top producer of energy across oil, gas, wind and solar power. We have built our identity on the idea of leading the world as a powerhouse for energy production, but Texas also has to deliver results to its residents and the United States; otherwise, our global leadership falls flat.

Measuring Texas’ Global Leadership

Texas is the nation’s largest energy producer, leading the U.S. in wind-powered electricity generation and rapidly expanding its solar capacity, according to the U.S. Energy Information Administration. Our state continues to lead nationally in large-scale energy investments, business-friendly policies and abundant natural resources.

Texas is not standing still or simply doing what it has always done. The state recognizes that to stay competitive, we must adapt and change. Diversification in the areas of liquefied natural gas exports and new investments in carbon and hydrogen capture are defining what the next chapter of Texas’ leadership will look like.

Energy leadership requires production, innovation and influence. Together, these will keep Texas as a formidable force in global energy production.

Our Local Texas Reality Is Important, Too

When we zoom in to look more closely at what is happening in Texas, the picture becomes a bit more nuanced. Our energy independence creates both flexibility and vulnerability, especially during major weather events such as winter storms and hurricanes.

Five years later, the effects of Winter Storm Uri remain in many of our minds. Demand for home generators has risen quickly in the state, with Houston leading the way due to grid uncertainty. As our population continues to rise quickly and more data centers are built in the state, grid stability remains a major factor in Texas’ ability to lead in energy innovation to meet the demands of residents.

ERCOT has developed a three-part plan to help mitigate the risk of grid failure during periods of extreme demand or emergencies. While this is an improvement over five years ago, Texas still needs to invest significantly in grid resiliency.

Texas’ Energy Market and Affordability

Often, proponents of our deregulated energy market in Texas hold it up as an example of healthy competition and consumer choice. Lawmakers claim that it gives residents the ability to select an energy plan that best meets their needs.

In practice, however, the market can be difficult to navigate. There are many electricity plans and providers, so residents often feel overwhelmed when navigating the energy market. With fluctuating rates, complex contracts and peak pricing structures, monthly energy bills can be surprising.

Additionally, as utility companies seek to distribute energy infrastructure costs to customers, prices are rising rapidly. According to TEPRI, electricity rates have risen by 30% since 2021, and the organization predicts an additional 29% increase by 2030.

A 60% increase in electricity prices over less than a decade will affect more than 4.1 million LMI (low- to moderate-income) households in Texas. Conservative projections by TEPRI estimate that by 2030, LMI households will pay an additional $863 annually for electricity, representing an electricity-pricing burden of 8.2%.

The energy affordability crisis is just beginning here in Texas, and greater education and proactive legislation are needed to help LMI households navigate the changing market and rising energy costs. LMI households are already choosing between paying for electricity and healthcare for their family members.

If Texas wants to remain a global leader in energy production, innovation, reliability and affordability, the rising cost of energy needs urgent attention.

Grid Resilience Is Mandatory

In addition to energy affordability, Texas frequently experiences extreme weather, making grid resilience foundational to its continued leadership in both local and global markets.

Between 1980 and 2024, Texas experienced 190 weather-related events with financial losses exceeding $ 1 billion. From hurricanes along the Gulf Coast to prolonged heat waves and drought, the state’s energy infrastructure is under increasing strain. These events necessitate that Texas invest in long-term planning and preparedness for its energy infrastructure.

Next Steps for Local Leadership

Texas needs to strengthen every part of its energy infrastructure. Leading locally means strengthening the grid by building out transmission, scaling battery storage, and deploying smarter, more responsive technology. At the same time, we need to make the market easier to navigate and ensure Texans are better educated and protected as they make energy decisions.

Additionally, as Texans become more informed about the energy landscape, it is crucial to equip them with the knowledge to use energy conservation tools such as programmable thermostats, mobile apps to monitor and adjust energy usage, shifting away from peak-hour usage and selecting energy plans without gimmicks or tricky clauses.

These important intersections are where Texas’ global leadership meets local impact in a critical time of change and transition in the Texas energy landscape.

Going Forward

Beyond addressing the critical issues of reliability and affordability at home here in Texas, it is important to recognize that they are also global. While we already export our energy products to the world, we have a unique opportunity to also export solutions in grid innovation, market design and technologies that are applicable to varied environments and markets around the world.

If we get it right, Texas will be known for not only producing energy but also for shaping how energy systems evolve globally. In order for Texas to lead both locally and globally, we need to focus on performance through smarter infrastructure, thoughtful policy and informed consumers.

Because true energy leadership isn’t just about how much we produce, it’s about performance, access and impact from Texas communities to the global stage, which is an imperative that goes far beyond Earth Day.

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Sam Luna is director at BKV Energy, where he oversees brand and go-to-market strategy, customer experience, marketing execution, and more.

Houston energy transition hub opens applications for new fundraising cohort

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EnergyTech Cypher has opened applications for its second Liftoff fundraising program.

Applications close May 20 for the 10-week virtual fundraising sprint. The program is geared toward energy and climatech founders preparing to raise their first institutional round. It will cover fundraising requisites, like pitch materials, term sheet negotiation and round closing, according to a release from EnergyTech Cypher.

The program kicks off June 1 and runs every Monday from 1-3 p.m. CST. It will conclude with an in-person capstone simulation in Houston on August 3, where founders will work to close a mock round.

Jason Ethier, EnergyTech Cypher founder and CEO, will lead the program with Payal Patel, an EnergyTech fellow and entrepreneur in residence.

The program is available through Cephyron, EnergyTech Cypher's new investor relationship management platform, built specifically for energy and climatech founders. Users must have a Cephyron Boost membership to participate in the Liftoff program.

The Cephyron IRM app recently went live and is available to founders at any point in their fundraising process, according to the news release. The platform aggregates investor data, tracks market signals and delivers curated weekly recommendations.

EnergyTech Cypher launched Liftoff last year. The inaugural cohort included 19 startups, including Houston-based AtmoSpark Technologies, The Woodlands-based Resollant and others. Each participant closed at least one fundraising deal, according to EnergyTech Cypher.

EnergyTech Cypher rebranded from EnergyTech Nexus earlier this year. It also launched its CoPilot accelerator in 2025. The inaugural group presented its first showcase during CERAWeek last month.

EnergyTech Cypher's annual Pilotathon Pilot Pitch and Showcase applications also opened this month. Find more information here.

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

the view from heti

3 things to know this week: Energy startups announce big wins, evaluating the IRA's first year, and more