US May See 619 GW Of Renewable Power Between 2023-2030: Report

With Lowest New Additions, Sept Proved To Be The Worst For India's RE Sector 

A latest report from BloombergNEF forecast a staggering 619 gigawatts (GW) of solar, wind and storage to come online between 2023 and 2030 in the United States. The report forecasts that this will raise energy capacity by 19 GW from the previous outlook. While structural constraints, such as permitting and grid connections, and a higher cost of capital threaten buildout, BNEF expects this to be outweighed by equipment cost declines, load growth, and strong demand for new clean power supplies.

The report estimates that utility targets and procurement plans are key drivers of new clean power builds in the US. Many utilities have included energy storage targets too, driven by increasing reliability needs, which will help the storage market take off outside of just California and Texas, the report elaborates.

The report identifies a higher cost of debt for squeezing the long-term levered returns for solar and wind projects, and investors are largely limiting deals to those projects that have secured grid connections. The extension and expansion of tax credits under the Inflation Reduction Act (IRA) will partly offset higher interest rates, the report elaborates. Some of the new subsidies and rules, such as the option to sell tax credits, if implemented carefully, will even make some projects very lucrative. Moreover, the report indicates that the US is on track to reach record levels of investment in solar this year as plenty of capital chases projects.

The report indicates that, as per the trend, the developers have, for the most part, been able to pass through higher costs to the final electricity buyer in the form of higher power purchase agreement (PPA) prices. But electricity buyers are increasingly pushing back against higher PPA prices, especially as the market expects weaker gas prices in the future due to high inventory levels, the report adds.

This means that solar dominates the forecast through 2030, despite higher costs of capital, grid connection bottlenecks, and curtailment risks. The US solar boom is on the way, and the report forecasts it to go up by 12 GW for the 2023–2030 period, compared with their previous outlook. The report anticipates most of the increase will be in home solar, which will overcome financing constraints thanks to long-term cost declines.

Whereas, the report anticipates that onshore wind installations will decline for a third year in a row in 2023, primarily due to a scant pipeline of projects. Additionally, the tax credit from the Inflation Reduction Act (IRA) and the easing of transmission and permitting constraints will drive onshore wind growth later in the decade. High inflation and interest rates have stifled offshore wind growth, with about 3.2 GW of projects canceling their offtake contracts this year, the report highlights. Thereby, the total annual wind build will surpass 11 GW by 2025 and climb to 23 GW by 2030.

The report depicts that the US energy storage market is rapidly growing, with California and Texas accounting for most deployments. It is expected that the installed capacity will reach 132 GW/460 gigawatt-hours (GWh) by 2030 as utilities in the Northwest, PJM, and Southeast now add energy storage to their integrated resource plans.

The US transmission network could reportedly grow 9% with 380 GW of new capacity if planned and in-flight projects are built by 2030. This is phenomenal for the onboarding of renewables but will only be realized with federal reforms to reduce permitting timelines and drain interconnection queues. While legislation is ongoing, an onslaught of extreme weather has pushed utilities from Hawaii to Texas to consider a dueling investment priority – grid resilience.