Summary in graphic
S&P Global Market Intelligence report analyzes the potential impacts of repealing the Inflation Reduction Act (IRA) on US power markets. Here's a summary by region and key terms:
Key Terms
REC (Renewable Energy Credit): A tradeable certificate representing proof that 1 MWh of electricity was generated from renewable sources. Utilities buy RECs to meet renewable energy requirements.
RPS (Renewable Portfolio Standard): State mandates requiring utilities to source a certain percentage of electricity from renewable sources by specific dates.
IRA: The 2022 Inflation Reduction Act providing tax credits (PTC/ITC) for clean energy projects.
Regional Impacts of IRA Repeal
ERCOT (Texas)
- Capacity: Moderate renewable reductions offset by natural gas
- Prices: Only region with energy price decreases due to combined-cycle plants replacing peakers
- Generation: Shift from renewables to gas-fired generation
PJM (Mid-Atlantic)
- Capacity: Significant renewable capacity loss, higher gas capacity
- Prices: Energy prices rise substantially; capacity prices increase
- Financial: Wind remains viable without IRA; solar struggles without competitive REC markets
New York (NYISO)
- Capacity: Must compensate for lost offshore wind with onshore renewables
- Prices: Capacity prices vary by season and location
- Challenge: Meeting aggressive Clean Energy Standard targets without offshore wind
New England (ISO-NE)
- Capacity: Offshore wind replaced by solar/onshore wind
- Prices: Capacity prices decrease due to less curtailment of renewables
- Impact: REC prices fall as renewable targets become harder to meet
MISO (Midwest)
- Capacity: Regional variations - more gas in northern zones
- Prices: Summer capacity prices decrease; energy prices rise
- Challenge: Limited REC markets make renewables less viable
California (CAISO)
- Impact: Significant energy price increases (largest percentage gains)
- Challenge: High renewable penetration threatened without tax credits
Southeast (SERC/FRCC)
- Florida: Dramatic impact - 100% of wind and 50% of solar becomes uneconomical without RPS mandates
- Generation: Heavy shift to gas peaking plants
Southwest (SPP)
- Impact: Wind projects struggle without formal capacity markets
- Revenue: Relies mainly on energy and voluntary REC revenue
Overall National Impact
- Capacity: 13-15% reduction in solar, wind, and battery storage by 2035
- Emissions: CO₂ reduction goals fall from 20% to 11% below 2022 levels
- Generation: 16% increase in gas generation, 5% increase in gas capacity
- Prices: Energy prices rise nationwide except Texas; REC prices fall generally
The report concludes that states with strong RPS mandates fare better, while regions without renewable requirements see the most dramatic shifts back to fossil fuels.
