Primed for the Future but Struggling Today: The Clean Energy Market in 2022

2022 was a historic year for clean energy. After years of instability, Congress delivered a decade of policy stability positioning clean energy technologies as the clear choice to power the grid of the future and drive economic growth in communities around the country. The offshore wind market moved forward with multiple lease sales including the first along the West Coast, while energy storage set deployment records quarter over quarter.

At the same time, developers struggled mightily to plug in projects this year as supply chains remained tight, detentions kept many solar projects from receiving panels, and grid connection issues delayed projects from starting to deliver power. Overall, this points to a slowdown from record levels seen in 2021 and 2020. So, paradoxically, while the industry is well positioned for accelerated future growth, 2022 will not live up to expectations.

With that in mind, let’s look at key clean energy highlights from this past year.

Passage of historic clean energy investment 
The Inflation Reduction Act (IRA) represents the single largest investment in renewable power and climate action in our nation’s history.  A key feature of this legislation is the extension of production and investment tax credits through 2024 before transitioning to a technology-neutral tax credit. The latter tax credit will remain in place until 2023 or when electric-sector emissions fall to 75% of 2022 levels, whichever is later. For the first time, energy storage is eligible for the investment tax credit, while domestic manufacturing of clean energy components is incentivized through additional tax credits.

ACP’s initial analysis of the IRA demonstrates the enormity of the legislation’s impact on the nation’s clean energy landscape. We expect that the IRA will deliver an estimated 525 to 550 gigawatts (GW) of new, utility-scale clean power from 2023-2030. Building on the existing clean power fleet, there will be roughly 750 GW of clean power capacity operating in 2030. 

Beyond providing clean and reliable energy, projects installed thanks to the IRA will have outsized benefits on their surrounding communities. Building 525 to 550 MW of new capacity will generate between $550 to $600 billion in capital investment. More broadly, construction of these projects is expected to generate over $900 billion in economic activity and add nearly $500 billion to U.S. GDP across the decade. After construction, ongoing maintenance and operations will contribute over $14 billion to U.S. GDP each year while generating nearly $29 billion in annual economic activity.

American made clean power
Between the passage of federal incentives and the end of November, ACP is tracking more than $40 billion of new utility-scale clean energy investment announced. Alongside private investment, 20 new domestic manufacturing facilities supporting utility-scale clean energy have been announced, bringing with them 7,000 new American jobs. 

Throughout 2022, numerous clean energy manufacturers have announced plans for new U.S. facilities, strengthening a future made-in-American clean power supply chain. For instance, First Solar, a leading American tier 1 solar manufacturer, is investing heavily in its manufacturing capabilities throughout the U.S. The company is investing $1 billion in a new 3.5 GWdc manufacturing facility in the Southeast and expanding its footprint in Ohio with a $185 million investment to increase manufacturing capacity in the state by 0.9 GWdc. In total, the solar manufacturer expects to have a workforce of over 3,000 in four states, while supporting 15,000 indirect and induced jobs by 2025.1 

Once-abandoned manufacturing sites are also getting new life thanks to clean energy manufacturing companies. In Iowa, TPI Composites, a wind turbine maker, closed its doors in 2021, cutting 700 jobs. Now, thanks in part to support from the IRA, TPI Composites and General Electric have signed a 10-year agreement, allowing turbine blade production to resume in 2024, bringing Iowans back to work. Nextracker and BCI Steel have also announced plans to renovate the abandoned Bethlehem Steel factory in Pittsburgh, PA. The Pittsburgh facility is Nextracker’s third partnership with a steel manufacturing partner in 2022 as part of the company’s commitment to rebuilding America’s steel and solar supply chains. 

The IRA has also given many utilities the opportunity to reduce electricity costs for customers, providing over $2.5 billion of consumer savings to 15 million Americans. Companies explicitly tied these savings to federal incentives that make new project investment less expensive, meaning utilities can rely less on customer rate increases to fund projects.

Historic offshore wind leases across our nation’s coasts
The Bureau of Ocean Energy Management (BOEM) held three offshore wind lease auctions in 2022. The first, held in February, took place in the New York Bight, a stretch of ocean between New York and New Jersey. The auction, for six lease areas with the potential for at least 5.6 GW of capacity, lasted three days and drew winning bids totaling roughly $4.37 billion. This record-breaking offshore wind lease auction highlights the strong opportunities for developers in the region. 

BOEM held two additional offshore wind lease auctions in 2022. In May, an auction for two lease areas in the Carolina Long Bay region resulted in winning bids totaling $315 million. Combined, the two areas have a potential capacity of at least 1.3 GW. This lease auction represents the southernmost lease sale on the East Coast, bringing more clean, reliable offshore wind energy to the Carolinas.

In December, BOEM held the nation’s first offshore wind lease auction on the West Coast. The lease auction, for two leases off Northern California and three leases off the Central Coast, lasted two days and drew winning bids totaling $757 million. Deep waters in these lease areas necessitate the use of floating offshore wind. The U.S. is primed to be a leader in the development of floating offshore wind technology.

Delays, delays, delays
Despite expected future investment and growth, the industry currently faces supply chain and trade roadblocks stagnating new installations. ACP is tracking clean power project delays happening since the end of 2021 and the volume is staggering – over 36 GW of clean power are delayed. These are projects that should otherwise be online and delivering clean power to Americans.

More than 8 GW of projects have experienced multiple delays. Delays are setting many projects back by more than just a few months; of the 14.2 GW of delayed capacity that was expected online in the third quarter of the year, only half of it is expected to come online by the end of the year. On average, delays are well over six months.

Solar projects make up 63% of the delayed capacity, primarily due to an inability to obtain panels as a result of continuing trade restrictions. Wind accounts for just less than a quarter of all delayed capacity. Wind delays are caused by ongoing supply chain constraints and grid interconnection delays. Battery storage has been the least affected, continuing to achieve record quarter after record quarter for new installations, but has not gone totally unimpacted. Nearly 5 GW of battery storage capacity, primarily paired with delayed solar projects, has experienced delays.  

Historic clean power projects begin operations 
Despite headwinds, clean energy developers have been able to bring online multiple historic projects this year. One project that cannot go without mention is Traverse Wind, one of the largest single phase wind projects to be commissioned in the country to date. The 998 MW Oklahoma project, developed by Invenergy, came online in the first quarter of the year. There are now 356 General Electric turbines operating at the site and providing power to the Southwestern Electric Power Company and Public Service Company of Oklahoma. American Electric Power Company (AEP) chairman, president, and CEO Nicholas K. Akins stated that the project’s completion was a “significant milestone in [AEP’s] efforts to provide clean, reliable power to [their] customers while saving them money.”

NextEra’s Wheatridge Renewable Energy Facility, which came online this year in Oregon, is a prime example of the growth of hybrid clean energy projects. Wheatridge, featuring 300 MW of wind capacity, 50 MW of solar, and 30 MW/120 MWh of battery storage capacity, is the largest fully operational hybrid facility in the U.S. combining all three technologies. The project is playing a big part in getting Portland Gas and Electric, who is purchasing the output, closer to their goal to reduce greenhouse gas emissions from power served to customers by at least 80% by 2030. 

Battery storage has been growing rapidly over the past few years, in part because of increasingly large standalone projects commissioning. One example of that is the Crimson Storage project, the largest single-phase battery project currently operating. The project, located on Bureau of Land Management (BLM) land in the California desert, was developed by Axium Infrastructure and Canadian Solar. Two California utilities, Southern California Edison and Pacific Gas and Electric, hold long-term contracts with the project, thanks in part to reliability mandates made by the California Public Utilities Commission. 

As the year comes to a close, the clean energy industry has much to celebrate, yet lots of work still left to do.  More than 216 GW of clean energy are currently operating and powering homes and businesses across the nation. With the passage of the IRA, historic investment is poised to help the industry exponentially increase annual deployments while building out a domestic supply chain.  However, several roadblocks remain. To realize the full power potential of the clean energy industry in the coming year, Washington must focus its efforts on improving trade policies, enacting common sense permitting reform, and finalizing effective tax implementation.  And if these important policies come to fruition, clean power will continue to grow across the country and power more homes and American businesses, create jobs and spur a new era of American manufacturing.

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