U.S. clean energy faces supply chain hurdles
Construction of solar and wind farms needed to purge planet-warming fossil fuels from the grid slowed dramatically this year as trade problems, fiscal uncertainty and supply chain disruptions stifled development.
So far this year, about 14 gigawatts of clean energy facilities have been built, 18% less than the same period in 2021, according to a report from industry group American Clean Power on Wednesday. The third quarter was even worse with wind installations falling 78% and solar down 23% from a year earlier.
Clean energy development in the U.S. is marked as the Biden administration calls on the world’s largest oil producers to increase production to control high prices. Ahead of the start of the COP27 summit in Egypt, the White House also faces criticism for not giving more money to poor countries suffering the worst effects of climate change.
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Meanwhile, government plans to reduce emissions are not enough to prevent catastrophic global warming, according to a recent United Nations report.
“It was a slow quarter,” JC Sandberg, acting executive director of the ACP, said during a press conference Wednesday morning. “We need to work out some delays.”
The solar market has faced repeated delays as companies struggled to obtain panels during a complicated trade dispute , while uncertainty around tax incentives and delays in grid interconnection slowed wind power development, according to the ACP.
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The passage of the Inflation Reduction Act should help reverse the slowdown, and ACP predicts the landmark legislation will enable a tripling of annual wind, solar and battery storage installations by 2030.
“A lot of the weakness we saw is reflected in the delays,” ACP’s head of research, John Hensley, said during the call. The group is tracking about 36 gigawatts of delayed clean energy projects, which it estimates are enough to power 7 million homes.
The United States has built a total of 216 gigawatts of clean energy, which provides electricity to about 59 million homes, according to the ACP. For reference, a large nuclear power plant generates about 1 gigawatt of electricity.
Battery storage was a bright spot in the report with 1.2 gigawatts installed during the third quarter amid its strongest year on record. Storage is an important part of the transition away from fossil fuels because it can store electricity for use when the sun goes down or the wind stops blowing.
Another factor holding back clean energy development is inflation and the general rise in prices for materials and labor.
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“High commodity prices are a macroeconomic problem that affects not only wind power, but also solar and storage,” Chelsea Jean-Michel, a wind energy analyst at BloombergNEF, said in an interview.
Rising interest rates are also a drag. Rising financing costs contribute to a “bearish outlook” for new wind farms coming online in 2023, Jean-Michel added in an email.
Jean-Michel said he does not expect the Inflation Reduction Act to result in full wind farms until 2024 to 2026 because of all the planning and preparation those projects require.
