“Build Back Better is dead. The Inflation Reduction Act is here.” -Barron’s
The Inflation Reduction Act looks set to pass and from the looks of things will have the potential to move some markets. Someone recently posted a thread on r/wallstreetbets asking which stonks are set to benefit from the act, however the discussion mainly stayed political and/or focused on whether or not the act was going to in fact reduce inflation. That’s a discussion to be had over a beer or three, but all I want to focus on here are which sectors are in the best position to take advantage of the capital that looks set to flow into the ESG markets.
In total there appears to be $369 billion earmarked for investment in “Energy Security and Climate Change”. How some of that breaks down is as follows:
Households could receive $28,500 in up-front incentives to buy electric vehicles and household appliances
Using the tax incentives and rebates in the Inflation Reduction Act, a low- or moderate-income household could choose from a variety of incentives that add up to $28,500 to switch to efficient electric home appliances, install rooftop solar, and buy new electric vehicles.
The Inflation Reduction Act makes the transition to an all-electric home more affordable than ever by offering the following incentives, which would be available beginning this year if enacted:
Purchasing electric vehicles: The Inflation Reduction Act offers up to $7,500 toward the purchase of a new electric vehicle or up to $4,000 toward the purchase of a used electric vehicle. Eligibility is capped so that these credits are not available to the wealthiest families—those earning more than $300,000 per year for new vehicles or $150,000 per year for used vehicles.
Installing rooftop solar: The Inflation Reduction Act provides for 30 percent off the cost of rooftop solar, which amounts to average savings of $7,000, according to estimates from the Sierra Club. The bill also offers 30 percent off the cost of home batteries for the first time.
Switching to electric appliances: The Inflation Reduction Act offers homes up to $14,000 in rebates to switch over to electric appliances—covering up to 50 percent of the costs for moderate-income households and 100 percent of the costs for low-income households. The total program is capped at $4.5 billion. This includes up to:
$8,000 for a heat pump, which serves as an air conditioner in the summer and heater in the winter
$1,750 for a high-efficiency, all-electric heat pump water heater
$840 for an electric induction cooktop
$840 for a high-efficiency all-electric heat pump clothes dryer
Up to $9,100 for enabling improvements to the electric panel, wiring, and home insulation
Improving energy efficiency: An alternative rebate option offers to cover more than 50 percent of the cost of whole-home energy efficiency retrofit or more than 80 percent in the case of homes occupied by low- or moderate-income households. Households that do not participate in either rebate program can still claim a variety of home energy tax credits, which are improved and extended for 10 years by the bill.
Making major investments in affordable housing and multifamily rental units: The Inflation Reduction Act’s investment incentives aren’t just for individual homeowners; in fact, the bill provides rebates of up to $400,000 for whole-building energy efficiency retrofits in large multifamily apartment buildings as well as grants and loans worth $1 billion in total for improving efficiency and installing zero-emission equipment in affordable housing units.
I haven’t done any recent due diligence into this topic yet, I just wanted to introduce the idea so we can start to think about it and discuss it in the chat room. The obvious sectors right off the bat would be electronic vehicles, solar makers/installers, and manufacturers of green energy technologies. *cough cough $DFCO* Extrapolating out a bit, it’s also easy to see the miners and producers of the resources and materials necessary for these ventures to benefit greatly as well. I don’t know when any of these sectors or stonks will get red hot, but all of them should potentially be on our radar.
It’s not just the fact that there’s all this capital pegged to flow into these markets in the coming years via this bill, but it’s also all the speculative money that will flood in as well. I believe our Dalrada is in the perfect place at the perfect time for absolutely immense growth, however it’s not alone either and there will likely be countless opportunities to take advantage of this. Let’s scour these specific sectors and not only spot the ones with the nicest long term charts, but then be fully ready when they begin to come to life. You’d think the actual passing of the bill itself will spark a run on at least some of these plays this week, so I think we’ll need to be alert right away and ready to potentially pounce.
