The US surpassed 200GW of total operating utility solar, storage and wind power plant capacity in 2021, but significant policy issues continue to slow industry growth and threaten the country’s ability to have a zero-emission power grid by 2035, according to the latest market analysis by the American Clean Power Association (ACP).
At year-end, the US had 134.9GW of operating wind installations, or 67% of the total, 60.6GW of solar (31%), and 4.6GW of energy storage (2%).
“Surpassing over 200GW of clean energy is a significant milestone for the US and shows that we can achieve even more with strong public policy support for the industry,” said CEO Heather Zichal, who urged Congress to “take action to create a clean energy future”.
Collapse of the Biden administration’s signature $2trn Build Back Better bill in December, aimed at reasserting US leadership on climate action, has left both his Democratic Party and the industry without a clear path forward legislatively for the many clean energy provisions.
The renewable energy industry last year installed 27.7GW of capacity including 2.6 GW of battery storage, 12.4GW of utility solar, and 12.7GW of wind, down 3% from the record year in 2020. The 196% jump in new capacity for battery storage and 39% for solar compensated for a 25% decline in wind.
The combined new build, while impressive by historical standards, is “only 45% of what’s required to stay on track for an emissions-free power sector,” ACP said in its Clean Power Quarterly 2021 Q4, referring to Biden’s 2035 target.
Texas led all 50 states in new clean power capacity additions in 2021 with 7.3GW followed by California (2.7GW), Oklahoma (1.5GW), Florida (1.39GW), and New Mexico (1.38GW).
ACP said demand for clean energy remains strong including from consumers such as homeowners. Corporate buyers surpassed utilities in procurement for the first time, announcing more than 14GW of deals in 2021. Utility contracted for more than 10GW.
Solar was the dominant technology with a 70% share of the 28.1GW of PPAs announced in 2021, up 18% from the previous year.
ACP reported on 31 December the US had a 120.2GW project pipeline including 66.3GW of solar, onshore wind 23.8GW, offshore wind 17.5GW, and energy storage 12.5GW.
Texas is the top state in terms of capacity under construction and in late stages of development with 19.9GW, followed by California (13.7GW), and New York 7.8GW).
Average PPA prices increased 15.7% in 2021 year-over-year, driven mainly by higher wind prices (19.2%), according to the report, citing data from LevelTen, which operates a renewable energy marketplace and platform. Solar PPA prices also rose 12.1%.
According to findings from a LevelTen survey, PPA price volatility is being fuelled by long grid connection timelines and high costs of grid updates.
Project developers also said higher prices also reflect upward inflationary pressures from pandemic-related disruptions to the supply chain, ongoing logistics challenges and workers shortages, and anticipation that the Federal Reserve will soon begin to raise interest rates to cool an overheated economy.
In an ominous sign, PPA prices for future projects increased nearly 6% in the fourth quarte with “supply chain constraints, commodity price increases, expiring tax credits, and trade barriers all weighing on project economics”, according to the report. Solar prices rose 5.7%, while those for wind up 6.1%.
The narrowing price advantage of renewables versus coal, if it continues, could slow the transition to cleaner sources, particularly if Congress fails to extend tax credits and approve new ones for energy storage, manufacturing and transmission.