The momentum surrounding the renewable energy sector today is palpable. From bold climate plans coming out of the White House in rapid succession to increasingly ambitious clean energy targets from Fortune 500 companies, there is a healthy – and fast-growing – appetite for renewable power here in the US.
To better understand the potential for renewable energy growth, the American Council on Renewable Energy (Acore) recently surveyed prominent financial institutions and renewable energy development companies on their expectations for renewable sector investment and development in the aftermath of the Covid-19 pandemic.
The results are exceptionally encouraging. Confidence among renewable energy investors and developers is at an all-time high. Nearly every company surveyed is planning to increase its investment or development activity over the next three years, with more than two-thirds of investors predicting increases of more than 10% this calendar year. As far as technologies go, energy storage and utility-scale solar now rank as the most popular investment preferences.
The findings suggest that 2021 will be a record-breaking year for the renewable energy and energy storage sectors. America’s leading investors and developers understand the urgency of the moment, recognising that now is the time to accelerate investments in renewable energy and grid-enabling technologies to avoid the worst impacts of climate change.
To start, we need a federal tax policy that moves beyond the endless cycle of temporary stopgap measures and embraces a long-term, level playing field for carbon-free generation
That is welcome news because the status quo is no longer acceptable if we want to truly tackle the climate crisis, especially when we see the amount of carbon dioxide in the Earth’s atmosphere once again hit the highest levels in human history.
Three years ago, Acore launched $1T 2030: The American Renewable Investment Goal, an initiative to secure $1 trillion in U.S. private-sector investment in renewable energy and grid-enabling technologies by 2030. Achieving this target would put US President Biden’s goal of a carbon-free grid by 2035 within reach. Today, we’re one-sixth of the way toward our $1T 2030 objective. Securing the remainder will require an average of over $90bn of investment a year through 2029 – an annual increase of 59% over the 2020 investment level.
This is unquestionably an ambitious undertaking. But with the proper policies and market drivers in place, we can get there and put America on the path toward climate success.
To start, we need a federal tax policy that moves beyond the endless cycle of temporary stopgap measures and embraces a long-term, level playing field in support of carbon-free electricity generation. We also need to invest in upgrading and expanding our antiquated electric grid.
Recent studies show that investment in a 21st century Macro Grid that better connects our nation’s largest population centres with our best renewable resources will dramatically reduce carbon emissions, save consumers billions of dollars and create hundreds of thousands of good-paying jobs. A Macro Grid is key to delivering the clean energy future Americans want and deserve.
Unfortunately, one lingering effect from the Covid-19 pandemic is a constrained tax equity market that makes it harder for developers to use renewable energy tax credits. According to both investors and developers, difficulty securing tax equity financing remains a significant roadblock to accelerating the clean energy transition.
Congress can help maximise renewable energy deployment to meet our climate goals through enactment of a direct pay option that would allow developers the option of accessing financing directly as an alternative to traditional tax equity.
With the Biden administration placing clean energy and climate at the forefront of its Build Back Better agenda, we are finally starting to see expanded federal support for renewable energy. Grid modernization measures and efforts to accelerate the transition to renewable power are central provisions in President Biden’s American Jobs Plan.
The critical next step is for Congress to translate these key elements into must-pass legislation this year. This is a once-in-a-lifetime opportunity to adopt smart policies that can boost our national economic recovery and help us secure the emissions reductions that scientists are calling for to avoid the worst impacts of climate change. Let’s not squander this precious chance to leave a better climate for our kids, and theirs.
· Gregory Wetstone is CEO of the American Council on Renewable Energy, a national non-profit with the mission of uniting finance, policy and technology to accelerate the transition to a renewable energy economy, and a Recharge Thought Leader