Developers installed 3,188 MW of utility-scale clean power in the second quarter, down 55% from the same time last year, according to a new report from the American Clean Power Association.
Solar installations fell 53%, while wind installations fell 78%, according to the report. On the other hand, energy storage facilities grew by 13%.
The CPA attributes the decline to economic uncertainty and political inaction. “Congress’s inaction and uncertainty over long-term fiscal policy, tariff and trade restrictions, and transportation constraints are all impacting demand for clean energy at a time when we need to rapidly scale up development” , ACP CEO Heather Zichal said in a statement.
Overview of the dive:
New figures from ACP provide additional insight into the impact of recent political and economic headwinds, including the Commerce Department’s China solar tariff investigation, on the renewable energy industry.
Developers completed 41 solar projects, 14 storage projects and five wind projects during the second quarter, bringing total installations for the year to 9,795 MW, according to ACP. Installations during the first half of 2021 totaled 13,000 MW.
While solar has suffered primarily due to price uncertainty and supply chain challenges, wind development is down substantially due to the planned elimination of the production tax credit, according to Tara Narayanan, Americas energy, gas and carbon analyst at BloombergNEF, who has tracked similar trends to the ACP. An extension of the tax credit was expected as part of the Build Back Better bill, but it now seems unlikely that the bill will pass Congress.
Although the industry has a record amount of clean energy in development, the report says, the rate of growth has started to slow. Developers began construction of 3,964 MW during the second quarter, while there is a total of 128,889 MW under construction and in advanced development, according to ACP. The trade group estimates that more than 32.4 GW of clean energy projects have been delayed since the end of 2021, including 21 GW of solar projects.
The second quarter also saw the number of projects starting construction or entering later stages of development decrease with only 7,000 MW entering advanced development, according to ACP.
“The prospects for these projects moving from development to constructed development are unclear without congressional action,” according to the CPA.
Zichal said CPA members are ready to build “America’s clean energy economy,” but “the current business and political environment is slowing the pace of deployment.” In addition to uncertainty surrounding long-term trade policy and tariffs on solar panels, the CPA also cited commodity prices, supply chain issues and delays triggered by Covid-19, and rising operating costs as challenges slowing down the industry.
Narayanan said BloombergNEF estimated that the contraction in renewable energy development could resolve itself within two years. But more recently, Narayanan said: “the number of unexpected events keeps increasing (including world events with repercussions, such as the war in Ukraine), [and] it is much more difficult to say anything with confidence.
However, corporate demand for renewables remains strong, according to the report, with companies signing power purchase agreements for more than 8,000 MW in the second quarter. Business purchases have increased 27% since mid-2021, driven by purchases from Amazon, Microsoft and Verizon.
Texas is currently the top state for renewable energy development activity, accounting for 18% of the total project pipeline, followed by California, New York, Indiana and Virginia, according to the ACP.