RMF Engineering has spent 35-plus years scouring the continental U.S. for the most elite engineers in the business. The firm then gave them the resources, educational tools, and technology they would need to consistently stay on top of their game.
The Inflation Reduction Act is expected to reshape the American energy industry. The bill would unlock roughly $369 billion to battle climate change, making it the single largest investment in combating global warming in American history. But, how exactly will the legislation impact the commercial HVAC/comfort engineering sector? Martha Larson, director of sustainability, RMF Engineering, shares what the IRA means to RMF and how the firm intends to use it going forward in the latest installment of the Blueprint.
Engineered Systems: What is your firm’s initial reaction to the passage of the Inflation Reduction Act?
Larson: It’s very significant. In just the past few years, RMF has seen exponential growth in requests for sustainable building design and energy decarbonization master plans, particularly for campus-scale district energy systems. At this point, there are proven technologies and several completed projects that demonstrate how to achieve substantial emissions reductions within the built environment. With $369 billion focused on clean energy and carbon reduction, the IRA will have a catalyzing effect. Many plans will now move into implementation. More plans will begin. We expect to see many more shovels in the ground.
Engineered Systems: Which provision is your firm most interested in/planning to utilize? Why/how so?
Larson: RMF Engineering has a decarbonization practice group that is increasingly focused on the electrification of heating and cooling systems, and the IRA will help to resolve two of the biggest challenges that team faces today: education and capital.
The initiatives championed by the IRA are essential to increasing overall awareness and education on why electrification is a promising path toward reducing emissions. More than raising awareness, the IRA outlines powerful financing measures that will be integral to turning ambitious emissions reduction goals into developed designs and implementation plans. Upfront capital funding is one of the biggest barriers to implementing a multiyear decarbonization plan. A life-cycle cost analysis may justify the long-term financial benefits of electrification but managing the upfront capital costs is a challenge. The IRA promises tax credits and incentives for renewable energy and low-carbon heating and cooling equipment, which can make a low-carbon transition financially more favorable than maintaining and replacing traditional fossil fuel-based equipment. The IRA extends those credits to nonprofit entities, like colleges and universities, which can now get direct payments instead of setting up separate entities to take advantage of the incentives.
As a result, we anticipate that RMF's decarbonization practice group will soon be busier than ever as our clients begin to tap into these benefits.
Engineered Systems: How will this legislation impact your firm in the short term? Long term?
Larson: As a society, we can’t achieve ambitious emissions reduction goals without also curbing continued emissions growth. In the short-term, we anticipate we’ll begin to see more clients incorporating low- or zero-carbon goals into new construction project requirements. The IRA dedicates significant funding to development of a zero building energy code, which, if successful, will impact a large portion of our building design projects. Electrical systems will be designed to accommodate more electric vehicle charging stations and all-electric heating and cooling equipment. More projects will incorporate on-site renewable energy production or require tie-in points for future addition of clean energy systems. Smart buildings and other enhanced building controls will become more common. Energy codes will continue to evolve, and many jurisdictions may implement stretch codes that go above and beyond state requirements. New technologies will develop, and existing technologies will improve. The engineers at RMF will need to stay on top of all those changes, which makes this an incredibly exciting time to be in our field.
Over the longer term, we’ll see many of today’s energy decarbonization master plans move through implementation. Campus-scale energy decarbonization projects generally have a five- to 20-year timeline consisting of multiple projects broken up into phases. There will be opportunities for us to engage in long-term partnerships with clients throughout all phases of a multi-year energy system transition. As technology advances, we will continue to evolve our approach to these projects.
Engineered Systems: What impact will this bill have on carbon? The smart grid? Energy storage? Renewable energy? Does your firm intend to increase activity in any of these areas? Why/how so?
Larson: RMF Engineering is deeply involved in projects to decarbonize buildings and district energy systems, so we expect to continue building that practice area to meet increasing needs. More of our new construction and renovation projects will incorporate sustainability and net-zero energy goals, so we will continue to advance our capabilities in that area. Since so much of this bill is focused on carbon-reduction technologies, it will motivate clients in all sectors to rapidly progress toward their carbon-reduction goals. The cumulative impact could be remarkable. Technological developments that are already underway for “smart grid” systems, battery storage, renewable energy, etc. will get a boost from funding and market demand. Clients who want to implement these technologies will benefit from increased availability, better performance, and reduced costs. With increasing emphasis on electrification, the IRA allocates funding to improve interstate transmission infrastructure. Grid operators and utility companies will be motivated to accelerate their grid modernization efforts including advancements in bi-directional “smart” metering, battery storage, and other technologies that prepare for the increased loads and enable further integration of renewable generation sources like wind and solar.
Engineered Systems: Are there any glaring negatives/weaknesses included in the bill you’d like to mention?
Larson: We are not sure yet whether these incentives and the resulting demand for renewable energy and electric heating and cooling equipment will also increase prices. Uncontrolled price increases could negate a core intent of the IRA, which is to make these technologies accessible to all and widely deployed. We also may see supply chain delays if demand increases faster than production. Our recent experience during COVID reminds us that supply chain delays can cause major disruptions to project schedules, which are carefully sequenced based on timely arrival of material. The resulting domino effect can quickly lead to project cost increases. It’s also important that the IRA delivers on its promise to boost jobs and workforce development in alignment with the expected uptick in project activity. It’s no good to receive a product on time if there aren’t enough people to install it.
Engineered Systems: Obviously, the bill is new and firms are still attempting to decipher its many layers. Does your firm have any questions regarding the bill?
Larson: We’d like to understand how the money will get allocated, what programs will be administered via state agencies, and what will be directly available to our clients. We want to understand what fund sources are available for certain projects and help clients navigate access to those funds. We will also be tracking technology advancements and emerging technologies that could be stimulated by the IRA. We want to make sure our clients have the most up-to-date information when making long-term decisions about their transition to a clean energy era.
Engineered Systems: Anything else you’d like to add?
Larson: The IRA is bold and extensive, but the technologies it promotes are not new. We will continue to build knowledge and experience to prepare our firm and our clients for a new energy future. Designers of all disciplines must be ready to respond as cities and states develop tighter energy efficiency codes, robust sustainable building policies, bans on new natural gas connections, and other policies to reduce or eliminate carbon emissions from the built environment. We are witnessing a rare convergence between accessible funding, available technologies, and bold climate policy. Engineers are at the forefront of a very exciting time in history.