At-risk IRA tax credits drive industrial-scale infrastructure in red and blue states

When we hear the term “renewable energy,” we picture golden California hills lined with solar panels or the vast Texas plains dotted with towering wind turbines. That’s why we were surprised when our research on the Inflation Reduction Act renewable energy tax credits took us to advanced manufacturing project sites that are revitalizing rural communities in the United States, like Sumter.

Sumter, South Carolina, is deeply rooted in agriculture, manufacturing and military tradition. Like many communities, it was hit hard by the 2008 financial crisis, leaving economic uncertainty in its wake. But today, Sumter is experiencing a resurgence, fueled in part by state and federal incentives like the IRA’s tax credits, which are driving a new wave of advanced manufacturing.

We saw this transformation firsthand on a crisp October morning, standing alongside community leaders and factory workers at the topping-out ceremony for e-Vac’s new permanent magnet manufacturing plant. Just months earlier, this site had been little more than dirt and blueprints. Now, steel beams stretched skyward, marking the rapid progress of a facility that will soon produce one of the most critical components in modern technology.

This single project will create hundreds of permanent jobs and inject millions of dollars into the local economy. It isn’t just a win for Sumter — it’s a strategic investment in America’s future.

Permanent magnets power everything from aerospace and defense systems to smartphones and electric vehicle batteries. Yet, 92% of the global supply is manufactured in China. Currently, the U.S. has no domestic production until this facility becomes operational. By building this facility at record speed, Sumter is proving that the U.S. can reclaim its place in the supply chain, securing both economic growth and national security in the process.

Sumter’s success story isn’t just about one factory; it’s about what happens when smart policy meets local initiative. But what if the very tax credits that made this possible are taken away?

Over the course of 2024, our Stanford-based research team spoke with nearly 75 experts — from energy lawyers to financiers to project developers — digging into the real-world impact of the IRA tax credits.

So what is a tax credit? Corporations pay taxes. Tax credits directly reduce the amount a company owes. While some policymakers advocate for lowering corporate taxes outright, tax credits offer a targeted approach, rewarding businesses for actions that benefit the economy. Under the IRA, renewable energy tax credits do just that. They lower tax burdens for energy developers not only in wind and solar, but also in nuclear, geothermal, renewable natural gas and domestic energy supply chain manufacturing. In essence, these credits make it more financially viable to build on American soil.

Since taking office, the Trump administration has pulled back many components of the IRA, shifting federal priorities away from clean energy investment. But there’s one thing that hasn’t changed yet: the IRA’s tax credits. That’s because they aren’t discretionary spending — they’re written into law. No executive order can erase them, but some members of Congress oppose them.

Our case studies are some of the first examples of how the IRA tax credits are driving investment, reshaping local economies, and securing America’s energy future.

Let’s go back to Sumter. The CEO of VAC, the parent company of eVAC, stated that federal and state incentives played a significant role in the decision to build the permanent magnet production facility in the U.S. versus Canada, or Mexico.

We saw a similar trend talking to developers of emerging geothermal projects, who strategically shifted their location to take advantage of the IRA’s energy communities bonus credit. This incentive, designed to drive clean energy investment into former fossil fuel hubs, is directing billions of dollars into regions that have historically been left behind in the energy transition​. Many of these areas, around 80% in Republican-leaning states, are now seeing economic revitalization through clean energy development.

At a wind farm in California, we heard how a municipal utility will be able to reduce electricity costs from 19 new wind turbines, which means direct savings for millions of consumers.

And even in Alaska, we examined a solar project developed by a tribal community. Originally planned at a smaller scale, the project was able to double in size due to IRA tax credit incentives. This expansion not only increases energy independence for the tribe but also provides long-term cost savings and resilience against volatile fossil fuel prices​.

Across these four case studies, a clear pattern emerged: the IRA is not about feel-good environmentalism — it’s about building America’s industrial future. It is not about planting trees; it’s about constructing factories, expanding domestic manufacturing, and fortifying supply chains to out-compete China. The IRA is driving industrial-scale infrastructure, from permanent magnet plants to wind farms, ensuring that the technologies of the future are built in America, not overseas. And it’s working — not just for blue states, but for red states, for former fossil fuel hubs, and for communities that need investment the most. At its core, this is a bipartisan success story. But its future isn’t guaranteed. If these tax credits disappear, so will plans for future factories, jobs and the chance to reclaim our industrial leadership.