U.S. households took advantage of more than $8 billion in tax credits last year under the Biden administration. Inflation Reduction Act (IRA), according to U.S. Treasury Department data released last week, with more than $6 billion going to solar and small-scale wind power and other renewable energy systems.

The publication shows that the number of households applying for renewable energy and energy efficiency tax credits, as well as the average value of their applications, have increased sharply. However, research published yesterday by the Financial Times shows that around 40% of the largest renewable energy investments under the IRA have been delayed by between two months and several years.

On the consumer side, the IRA’s tax credits for clean energy and energy-efficient home improvement projects are “more popular than originally expected,” Assistant Treasury Secretary Wally Adeyemo told the media last week. Although both tax credits have been around for years, the IRA has expanded them, and they have “proven so popular that the final cost of the law will likely be higher” than the $370 billion originally estimated, the New York Times reports.

Solar systems on roofs dominate

According to Treasury Department data, more than 3.4 million U.S. households claimed at least one of these tax credits last year, resulting in savings of more than $8 billion – far more than the $2 billion to $4 billion originally forecast by the bipartisan Joint Committee on Taxation. With total spending of more than $6 billion, “the solar panel tax credit was particularly popular, Treasury Department data show. More than 750,000 U.S. households claimed it last year,” the Times said. “A heat pump tax credit was claimed on more than 260,000 tax returns. Some households may have claimed both tax credits.”

According to the Times, the Clean Energy Tax Credit was most popular in southern states such as Arizona, California, Florida, Nevada and Texas. The Energy Efficient Home Improvement Tax Credit was most popular in northeastern and mid-states, led by Connecticut, Maine, Massachusetts, New Hampshire, Vermont and Wisconsin. Everywhere, solar panels were the most common investment, followed by insulation or air sealing, exterior windows and skylights, exterior doors, central air conditioning, efficient gas, propane or oil appliances and heat pumps.

Utility Dive reports that the number of households claiming the credits has increased by nearly a third compared to tax year 2021, while the total value of claims has increased by nearly two-thirds. According to the heat map, Treasury expects takeup to increase over time as households rarely invest in their home energy systems.

“The top economic priority of the Biden-Harris administration is to make life more affordable for Americans,” said Adeyemo. “The Inflation Reduction Act does just that.”

But “not all of the data flatters the Biden administration’s goals,” Heatmap writes. “The tax credits – particularly those that reward energy-efficient home renovations – are largely used by wealthier households that have the money and resources to pay for costly renovations to their homes in the first place.” And while nearly 268,000 households saved money by purchasing a heat pump, nearly 600,000 used their tax credits to buy fossil-fuel-powered appliances.

“There will be signs of wear and tear”

The industrial incentives have already led to a number of big announcements. But now “the delays are casting doubt on (President Joe) Biden’s presumption that an industrial transformation can bring jobs and economic returns to the US, where manufacturing has been offshored for decades,” the Financial Times reports. “They could also complicate Vice President Kamala Harris’ efforts to use the administration’s record in manufacturing to attract blue-collar voters in November’s presidential election.”

The Times reports that it has been keeping track of the 114 largest projects set to receive $227.9 billion in IRA incentives. Of that total, about $110 billion worth of projects are on schedule and just over $5 billion worth of facilities are in operation, according to a table accompanying the Times article.

Another $70 billion worth of projects have been delayed, about $12 billion worth of projects are on hold, and a few have been canceled.

“Companies said they have changed their plans due to worsening market conditions, falling demand and a lack of political certainty in a year with key elections,” the Times writes. The news article attributes delays in several solar production projects last year to “a collapse in global prices caused by overproduction in Beijing,” and points out that China dominates global production of both solar panels and batteries. Production of electric vehicles and components for electric vehicles has also stalled due to slower growth in demand for those vehicles.

“There’s going to be attrition. Not every single one of these plants is going to come online,” John Hensley, vice president of markets and policy analysis at American Clean Power, told the Times. “It’s just a healthy part of the competitive landscape.”

Choice mathematics

Rising costs, supply chain problems and a slow or unclear rollout of the program also had an impact, the Times writes. And “a possible victory by Donald Trump in the November presidential election has added to the uncertainty. While the majority of IRA-related manufacturing investments have gone to Republican-dominated districts, the bill received no votes from party members in Congress. At campaign rallies, the former president has vowed to ‘disband’ the IRA if elected.”

The Times quoted an executive who was working to move a $1.25 billion solar component factory to a state where a Republican congressman could defend it if Trump won the election. “Just in case you want to live in a Republican state, to have someone from the same party fighting for you and your rights,” the executive said.

But at least one U.S. news outlet is investigating whether the consumer tax credits will affect the election outcome in a key swing state after 158,550 Pennsylvania residents applied for more than $260 million in IRA tax credits.

“The clean energy revolution sought by the Biden administration is just beginning to take hold,” Politico writes. “Whether voters will see enough benefits to reward Harris and the Democrats on the lower ballots in November for this approach remains to be seen.” And “that’s especially true in Western Pennsylvania, a swing region in a swing state where the natural gas industry has become an economic powerhouse in recent decades.”

A key factor, Politico adds, is that the average voter is “not as familiar” with the many different investments that can be made from the IRA and the previous CHIPS and Science Act.

“They don’t see it as clearly as they should,” said John Walliser, senior vice president of legal and government affairs at the Pennsylvania Environmental Council. “This is leading to a real renaissance in many ways.”