Electricity Transmission Provisions in the Inflation Reduction Act of 2022
INSIGHTi
Electricity Transmission Provisions in the
Inflation Reduction Act of 2022
Updated January 4, 2024
On August 16, 2022, President Biden signed into law P.L. 117-169, commonly known as the Inflation
Reduction Act of 2022 (IRA). The IRA contains several provisions aimed at incentivizing increased
development of electricity transmission infrastructure in the United States. Many stakeholders view an
enhanced U.S. transmission system as key to enabling increased use of wind and solar energy for
electricity generation and improving resilience to extreme weather events. This analysis summarizes the
three transmission provisions in Part 5 of Subtitle A of Title V of the IRA. In total, this part appropriates
almost $2.9 billion for transmission provisions. Other provisions in the IRA, such as those related to loan
programs administered by the U.S. Department of Agriculture, could potentially incentivize transmission
development, but this analysis does not include them.
Section 50151 (Transmission Facility Financing) appropriates $2 billion to remain available until
September 30, 2030, for a direct loan program for certain transmission project development. To be
eligible for a direct loan, a transmission project would need to be located in a National Interest Electric
Transmission Corridor (NIETC). The U.S. Department of Energy (DOE) may designate an area as an
NIETC pursuant to 16 U.S.C. §824p if it meets certain criteria, such as promoting energy security or
enabling the use of intermittent energy sources such as wind and solar. On December 19, 2023, DOE
released final guidance for the NIETC designation process (no NIETCs currently exist). The guidance
outlines DOE’s process for NIETC designation. DOE intends to release a preliminary list of NIETC
designations in spring 2024, with any final designations occurring after environmental review and
additional public engagement around areas in the preliminary list.
Section 50152 (Grants to Facilitate the Siting of Interstate Electricity Transmission Lines) appropriates
$760 million to remain available through September 30, 2029, for making grants aimed at facilitating the
siting of certain onshore and offshore transmission lines. In general, state and local governments have
authority for siting electricity transmission infrastructure in the United States. This section would allow
relevant siting authorities to receive grants to be used for purposes including transmission project studies,
examination of alternative siting corridors, hosting negotiations with project backers and opponents,
participating in federal and state regulatory proceedings, and promoting economic development in
affected communities. Grants under this section would be contingent on the siting authority agreeing to
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make a final decision (approval or denial) on the transmission project within two years. The act does not
specify consequences should the siting authority fail to make a final decision.
Section 50153 (Interregional and Offshore Wind Electricity Transmission Planning, Modeling, and
Analysis) appropriates $100 million to remain available until September 30, 2031, for expenses for
convening stakeholders and conducting analysis related to interregional transmission development and
development of transmission for offshore wind energy. The continental U.S. transmission system is
comprised of three interconnections (i.e., grids) with limited connection among them: the Eastern
Interconnection, the Western Interconnection, and the Electric Reliability Council of Texas (ERCOT). The
Eastern Interconnection is the largest and is itself comprised of different regions, including five separate
power markets overseen by independent system operators or regional transmission organizations.
Currently, transmission development involving two or more regions is relatively rare. Some analysis
indicates that a greater amount of interregional electricity connection would promote greater use of
renewable energy and potentially lower costs for consumers. The Federal Energy Regulatory Commission
(FERC), which regulates rates for interstate electricity transmission, began a rulemaking in July 2021
aimed at potentially modifying multiple aspects of transmission development. An April 2022 FERC
Notice of Proposed Rulemaking focuses primarily on regional transmission planning and cost allocation.
FERC continues to examine interregional transmission planning, for example, as part of the Joint Federal-
State Task Force on Electric Transmission.
The IRA is the third significant energy-related law of the past two years (following the Energy Act of
2020, enacted as part of P.L. 116-260, and the Infrastructure Investment and Jobs Act, P.L. 117-58). Such
successive lawmaking is relatively rare for the electricity sector. Arguably, the last time a similar set of
events took place was when Congress enacted the Energy Policy Act of 2005 (P.L. 109-58) followed by
the Energy Independence and Security Act of 2007 (P.L. 110-140) and the American Recovery and
Reinvestment Act of 2009 (P.L. 111-5). The electricity sector changed significantly in the years following
enactment of those laws, with a marked increase in the use of natural gas, wind, and solar for electricity
generation accompanied by increased efficiency, which kept electricity demand growth low. The change
was in part driven by federal energy laws (especially tax credits), though market forces, state policies, and
other factors influenced the electricity sector as well. As in the mid-2000s, recently enacted energy laws
may drive significant changes in the electricity sector, though market forces and other factors are likely to
be important too.
Evaluating the potential impact of the transmission provisions in the IRA is complicated by three factors.
First, the other recently enacted energy laws are still being implemented, and their eventual impact on the
electricity sector remains unknown. Second, FERC could revise its transmission regulations thereby
affecting future transmission development. Lastly, electricity sector participants and regulators are
responding to numerous issues—including reliability challenges, nominal cost increases, and weather-
related risks—all of which may influence transmission infrastructure development in the years to come.
The IRA’s transmission provisions are an additional change to which the electricity sector will respond
moving forward.
Author Information
Ashley J. Lawson
Specialist in Energy Policy
Congressional Research Service
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Disclaimer
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