Show Me the Money—How to Find It

Show Me the Money—How to Find It

There is a Green Tidal Wave of money coming for clean tech innovators, but the question is how to get it.  One has to read over 1000 pages of “summary guidance” to figure this out.  It takes a lot of work, but at our MeetUp on the evening of January 26th, we presented what we had found in our own review of all the paperwork.  We focused on what the opportunities are for innovators to tap the Inflation Reduction Act and the Infrastructure Act for contract and grant money.  Over $250 billion is earmarked to fund more than 100 line items in each of the federal laws.  In addition, $50-100 billion is available from the state, through a dozen agencies, with the CEC and CARB being the most relevant.  (See in particular our recent blog on the CARB Scoping Plan.)   And many tax incentives have been created in addition that add to the total amount innovators could tap, and add hundreds of billions of dollars of subsidies to projects.  

The biggest take-away is that the details of how to apply for the money are very sparse right now.  That means the best thing to do is to begin to get on mail lists for future funding opportunity notices and to develop relationships with the state and local agencies most likely to be the ones that will administer the money.  Networking can be very effective to get you a better place in line when the money begins to flow.

One of the newest innovations in these laws is the idea of the “Direct Pay” of tax incentives to project developers, even if they have no current tax liability.  This is a huge change from trying to sell tax incentives to an organization with huge tax liabilities, for 60 cents on the dollar.  The impact would be 100 cents on the dollar and paid up-front.  It is like a zero-interest loan.  But like with everything else the details are absent.  How is the up-front payment to be reconciled with actual outcomes?  From whom will the direct payments come?  

A venture investor in the audience agreed that small startups should go after this kind of funding, since it is not a sale of shares and therefore, is non-dilutive.  Moreover, this funding can provide the means to demonstrate and develop a technology that would never be paid for by investors at an early stage.

We also had a discussion as to what the process for actually doling out the dollars would be and whether the politics of the current Congress will get in the way.

To learn more, watch the video below. It contains live links to several other source documents to aid your exploration of how this funding may help you.  We undoubtedly will be returning to this topic as more information is revealed.

IRA is an Investment in Battery Innovation

IRA is an Investment in Battery Innovation

Among many things, the inflation reduction act (IRA) is a big investment into our domestic battery production.  To get the details, you can read about the IRA from Moss Adams here. 

Here is what has us the most excited:

  • The establishment of a $27 billion Greenhouse Gas Reduction Fund for the Environmental Protection Agency to allocate towards emissions reductions projects. 
  • $250 Billion in Energy Infrastructure Loan Guarantees
  • $40 Billion in Clean Energy Loan Guarantees
  • The multitude of guarantees and incentives to build domestic battery capacity

We will cover more later, but right now I want to highlight how the EV incentive may drive investment and innovation in domestic battery production. The requirements for batteries in EVs lead to increasing investment in innovation. There are two parts.

  1. Battery materials must be sourced in the United States or a country that has a free trader agreement with the United States.
  2. Batteries must be assembled in the United States, Canada, or Mexico. 

This will limit what Electric Vehicles qualify for the incentive, but it won’t eliminate them

Batteries qualify by having a certain percentage (escalating over time) meet the requirements. There is no clarity on the requirements currently. Everyone is waiting on the Department of Transportation and the Treasury to make the final rules. Whatever they end up being, there is likely not enough capacity for materials and assembly to meet the potential demand. With high demand and shortages of materials, there will be investment to expand supply and innovation to increase efficiency/ reduce cost. Innovation in battery design and manufacturing should boom. The IRA is providing over $100 Billion in loans to speed up the transition. 

We have talked about Battery Advancements in the past. Now, we hope to see these advancements make it to the practical world.

New battery design, and chemistry are where I am excited about innovation. So far in the US there have been over% 15 Billion committed to building domestic capacity.  PEM Motion has a good Battery Atlas for Europe here. Over the past year, there were major investments by vehicle OEMs Tesla, Toyota, GM, Ford, and VW to build domestic battery capacity. They are partnering with major battery companies like SK Industrials, and LG Chem, who are also building plants of their own. Most analysts think this is not enough and we may need up to $100 Billion in battery manufacturing. With that amount of investment, slight improvements in battery design and manufacturing go a long way. Even with two Giga factories, Tesla is looking at investing $10 Billion more to keep their advantage.  

While the energy transition increases demand for storage, the investment from the IRA should get us ahead, increasing competition and building needed capacity.

ABOUT THE AUTHOR

Thomas is the Executive Director of CleanStart. Thomas has a strong background in supporting small businesses, leadership, financial management and is proficient in working with nonprofits. He has a BS in Finance and a BA in Economics from California State University, Chico. Thomas has a passion for sustainability and a commitment to supporting non-profits in the region.

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