Construction of solar and wind farms needed to purge planet-warming fossil fuels from the grid slowed sharply this year as trade issues, tax uncertainty and supply-chain disruptions stifled development.
About 14 gigawatts of clean-power installations have been built so far this year, down 18% from 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 dropping 78% and solar falling 23% compared with a year earlier.
Flagging US clean-energy development comes as the Biden administration asks the world’s biggest oil producers to increase output to tame high prices. Heading into the start of the COP27 summit in Egypt, the White House also faces criticism for not giving more money to poor countries experiencing the worst effects of climate change.
Meanwhile, government plans to cut emissions aren’t enough to avoid catastrophic global warming, according to a recent report from the United Nations.
“It was a slow quarter,” JC Sandberg, ACP’s interim chief executive officer, said during a media call Wednesday morning. “We need to solve for 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 grid-interconnection delays slowed wind development, according to the ACP.
Passage of the Inflation Reduction Act should help reverse the slowdown, with the ACP predicting the landmark legislation will allow a tripling of annual installations of wind, solar and battery storage by 2030.
“Much of the weakness we saw is reflected in delays,” ACP head of research John Hensley said during the call. The group is tracking about 36 gigawatts of delayed clean-power projects, which it estimates is enough to power 7 million homes.
The US has built a total of 216 gigawatts of clean power, which provides electricity for about 59 million homes, according to ACP. For reference, a big 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 slowing development of clean power is inflation and the overall price increases for materials and labor.
“The high commodity prices are a macroeconomic issue that’s affecting not just wind but solar and storage,” BloombergNEF wind analyst Chelsea Jean-Michel said in an interview.
Rising interest rates are also a drag. The increase in financing costs contributes to a “bearish outlook” for new wind farms brought online in 2023, Jean-Michel added in an email.
Jean-Michel said she doesn’t expect to see the Inflation Reduction Act result in completed wind farms until 2024 to 2026 because of all the planning and preparation those projects require.
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