Envisioning IRA 2.0: Restoring U.S. energy leadership

The U.S. renewable energy sector requires long-term policy certainty to maintain the 86 GW installation pace projected for 2026. However, recent regulatory shifts and the rollback of incentives for solar photovoltaics (PV) have introduced market volatility, exacerbating the 183 GW of large load capacity currently struggling to interconnect to a congested power grid. The expiration of key investment and production tax credits has sidelined capital and stalled commercial deployment.

Meanwhile, global competitors are rapidly accelerating; China added over 430 GW of new renewable capacity in 2025 alone, pushing its total past 2.34 TW. To secure American energy independence and achieve energy modernity against this unprecedented scale of deployment, the industry must look beyond the immediate legislative gridlock. Scaling our recent successes in domestic manufacturing and securing America’s competitive edge in the global market requires drafting a stable, long-term framework: a technical correction and extension of the Inflation Reduction Act—IRA 2.0.

The True Purpose of Tax Policy: Incentivizing Economic Development

At its core, tax policy structures market priorities. The fundamental purpose of the tax code is to encourage deployment of solutions that generate net positives for society, while discouraging practices that socialize long-term costs. The economic and social successes of the original IRA legislative framework are indisputable, driving nearly a trillion dollars of direct investment and a 400% return on federal incentives. But the most profound impact is felt at the community level.

“The true measure of a successful energy transition isn’t just calculated in megawatts; it is found in the creation of socially edifying jobs,” said Adolphus Pruitt, President of the St. Louis City NAACP. “When we incentivize clean energy infrastructure, we are building sustainable career pathways that uplift families, bridge historical economic divides, and generate secondary benefits that revitalize our entire community.”

Table 1. Highlighted economic development successes of the Inflation Reduction Act.

Russ Carnahan, founder of the High-Performance Buildings Caucus during his tenure in the U.S. House, emphasizes this principle: “The tax code should serve as an engine for the public good, not an anchor tying us to the technologies of the past. When we utilize tax policy to incentivize high-efficiency infrastructure and clean energy deployment, we aren’t just cutting emissions. We are lowering operating costs for businesses, improving public health outcomes, and building a resilient, 21st-century economy.”

As an executive navigating the daily realities of the clean energy sector, I see firsthand how vital these incentives are to projects moving forward or not. Whether structuring financing for large cap commercial installations or navigating complex C-PACE financing mechanisms, the math only works when federal policy provides a stable, predictable runway.

Evolving Technology and Obsolete Terminology: The Need for Technical Correction

For IRA 2.0 to function effectively, statutory language must keep pace with technological reality. Currently, incentives rely on outdated terminology, inadvertently excluding critical components of modern clean energy.

For example, the original legislation provided a manufacturing credit of 40 cents per square meter for the production of polymeric backsheets, which act as electric insulators for rear-side module protection. However, traditional opaque backsheets are becoming functionally obsolete for utility-scale deployment. The industry has shifted heavily toward bifacial modules, with dual-glass encapsulation which replaces the polymeric backsheet with a second layer of glass to capture reflected light, now accounting for over 75% of the bifacial market share.

While the current tax code subsidizes these legacy backsheets, it fails to explicitly capture polymeric encapsulants. These optically transparent encapsulants are required for modern dual-glass bifacial architectures, providing the essential structural support, physical protection, and electrical insulation between the two glass layers; they are clearly “critical” solar components.

To properly incentivize domestic manufacturing and align capital with current technological standards, IRA 2.0 must establish a formal coordination mechanism with industry experts to continuously identify and update eligible items. Legislation must reflect current hardware deployments, not just the legacy components of the past.

The Policy Blueprint: 48E, 45Y, and Domestic Content

A modernized framework will first require the stabilization of the 48E and 45Y tax credits, extending the investment horizon beyond upcoming sunset cliffs. The industry requires a standard ten-year horizon to secure financing, train workforces, and execute complex, multi-megawatt projects.

Second, the framework must streamline the process for claiming domestic content bonuses. The execution of these rules frequently leaves developers and EPCs struggling to verify the origin of sub-components. IRA 2.0 must provide clear, accessible compliance pathways so that mid-sized commercial projects can easily utilize American-made equipment.

“As the builders on the front lines of the clean energy transition, we see how the intent of domestic content rules gets bogged down in execution,” said Matt Connell, CEO of Orbital Energy. “Streamlining these compliance pathways will reduce administrative headaches and unlock gigawatts of commercial and industrial solar currently trapped in bureaucratic limbo. We need a system that lets us put American-made equipment on roofs without needing a team of forensic accountants to verify it.”

Third, the framework must expand support for community solar and microgrid development to empower local communities to generate, store, and manage their own power.

Protecting the U.S. Manufacturing Boon

Rebuilding the U.S. industrial base requires a clear-eyed approach to global supply chains to avoid trading a reliance on fossil fuels destabilized by geopolitical conflict for a reliance on foreign-controlled critical minerals.

“Protecting our domestic markets from proven, subsidized foreign PV cells and modules that drive market dumping is paramount,” said Martin Pochtaruk, CEO of U.S.-based solar manufacturer Heliene, which operates 1.3 GW of manufacturing capacity in Minnesota.[6] “That is why we need to maintain strict guidelines for domestic content adders in a possible IRA 2.0. This ensures that the trillions of dollars invested in our national shift toward renewables flow into American factories and communities, securing our role as the undisputed leader in next-generation energy technology.”

Conclusion

Our economic sovereignty and standing in the global market depend on our ability to modernize our energy infrastructure. As the industry looks toward the late 2020s, it must have a comprehensive, actionable policy framework ready to deploy. IRA 2.0 represents that framework. It is a commitment to utilizing the tax code for its most efficient purpose: protecting domestic manufacturing, building out a localized workforce, and scaling a decentralized, resilient power grid.

About the Author

Byron DeLear is CEO of Sustainable Equity LLC, a financing and clean energy developer of C-PACE (“Commercial Property Assessed Clean Energy”), large-cap commercial, and utility-scale projects. A leading advocate for domestic manufacturing and grid decentralization, DeLear writes frequently on the intersection of tax policy, equitable economic development, and America’s transition to a resilient, clean energy economy.

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