The US installed a record 6.62GW of utility-scale onshore wind, solar, and storage capacity in the first quarter, up 11.5% from a year ago, but the renewable energy sector’s outlook is increasingly clouded by macroeconomic and policy issues, according to a new report the American Clean Power Association (ACP).
“The record-breaking quarter for clean power is encouraging, but the industry still faces many hurdles that are stalling growth,” said ACP CEO Heather Zichal, citing the impacts of inflation, supply chain delays, the “unsettled fate” of clean energy tax credits, and ongoing uncertainty from the Department of Commerce’s (DoC) “unwarranted” solar tariff case.
These issues are “making investment and planning decisions a difficult challenge,” she added, noting the industry needs resolution and policy clarity if it is to meet President Joe Biden’s 2035 target for achieving a carbon-free electric grid.
US inflation rose at an 8.3% annual rate in April barely below the fastest pace in four decades, while labour shortages and lingering Covid-related crosswinds continue to buffet the supply chain.
Battery storage was the biggest growth engine in the quarter with 758MW of new capacity, up 173% from a year earlier, with more than half part of hybrid projects, mostly solar, according to the ACP Clean Power Quarterly 2022 Q1.
The 3GW of solar installations were also a record for the period and an 11% increase year-on-year, although more than 2.8GW of projects scheduled to come online were delayed into the latter part of this year or 2023 and later.
The DoC’s decision to initiate a review of a petition by Auxin Solar to apply anti-dumping and countervailing duties against module manufacturers located in four countries in Southeast Asia has had an immediate, chilling effect on the industry in the US.
ACP said results of its market impact survey of leading utility solar developers indicates that at least 65% of the forecast 17GW (on a direct current basis) of crystalline silicon capacity additions to the grid this year are at risk of delay or cancellation. The most common reason cited was lack of PV module availability.
Onshore wind installations fell 3% to 2.86GW versus the same 2021 period, but saw still a good performance historically for the period. Developers are pushing ahead to complete projects that qualify for the federal production tax credit (PTC), which expired at the end of 2021.
Depending on start of construction date from 2016-21, an onshore project can qualify for 40% to 100% PTC value ($25/MWh) if it meets commercial year-end operation deadlines from 2022 to 2025.
ACP reported that almost 1.7GW of additional projects experienced delays in the first quarter, bringing the national total to about 4.6GW since the end of 2021.
On 31 March, the US had 208GW of utility clean energy capacity in place with 138.6GW onshore wind, 63.8GW solar, and 5.49GW battery storage.
The industry ended the first quarter with 40.52GW of capacity under construction spread across 43 of the 50 states with 53% solar, 35% wind, and 12% storage. Texas led all states with 12GW followed by California (4GW), Wyoming (3GW), and Nevada (2.1GW).
Although there are 18 offshore wind projects in development that have off-take contracts totalling nearly 17.5GW, none are under construction, which ACP defines as in-ocean construction.
Advanced clean power development activity totalled almost 85GW nationwide, meaning projects have secured an off-take agreement or equipment order, but have not yet begun construction. California was the top state with 10GW followed by Texas (9.9GW), New York (8GW), and Indiana (4.9GW).