Advancements in renewables project pipeline
Kassia Micek breaks down the project development pipeline in the US clean energy sector, which has been dominated by solar power generation on the back of falling costs.
The passage of the Inflation Reduction Act (IRA) in the US has driven clean energy manufacturers to boost domestic manufacturing
facilities and falling technology costs in recent years have pushed solar to the top of the project development pipeline.
Of the 170.862 GW of utility-scale solar, land-based wind, battery storage and offshore wind projects in the pipeline, 70.950 GW are under construction with another 99.913 GW in advanced development, a 26% increase year on year, according to the American Clean Power Association’s (ACP) Q4 report. Solar makes up 55% of the development pipeline, followed by battery storage at 18%, land-based wind at 16% and offshore wind at 11%.
"This is not surprising as utility-scale solar has been the leading resource type for a few years now and is only getting more competitive with IRA tax credits and continued cost declines," said Sam Huntington, director on the North American Power team with S&P Global Commodity Insights.
After adding a record 33.8 GW of new utility-scale clean energy projects in 2023, the US now has 262 GW of clean power capacity installed.
Domestic manufacturing
"Since the passage of the IRA, clean energy manufacturers have been rapidly announcing new manufacturing facilities to support the clean energy supply chain across wind, solar, battery storage and transmission," the ACP said in its latest quarterly report.
"To date, 123 new manufacturing facilities or facility expansions have been announced. This includes 78 solar manufacturing facility additions, 20 new grid-scale battery storage manufacturing facilities or facility expansions, four grid connection facilities, 12 land-based wind power manufacturing facilities, and nine offshore wind power manufacturing facilities."
Forty-four facilities have either completed construction or are currently under construction.
Nextracker, which provides intelligent solar tracker and software solutions, has massively cranked up its manufacturing, CEO Dan Shugar said.
"Today, solar is by far the lowest cost way to generate power almost everywhere on earth," Shugar said. "It’s the fastest to install. You can do a project from the beginning of construction and completion in a year, and it’s the lowest risk because there’s no fuel volatility."
The IRA provided generous incentives to stimulate domestic jobs, which further boosted solar developments in the US.
"During the pandemic, it became very hard to deliver materials report," Shugar said. "The global logistics situation became quite unpredictable in terms of schedule and costs, so we decided to massively ramp up domestic manufacturing per schedule and also to control logistics costs."
The company completed three US solar manufacturing facilities in Q4 2023 and has the capability to make 25 GW a year of major components for the US market, Shugar said.
The solar manufacturing industry employs about 268,000 people directly, compared with the peak of the coal industry at 80,000, Shugar said, adding that for every direct job, there are about five indirect jobs.
"Solar is a really big part of the economy. We’re seeing the wind industry is also a very major part," Shugar said. "We’re creating jobs, and it also lowers the cost of the energy coming out of solar for customers."
A new solar plant is one-third of the cost of a new coal plant and about one-fourth of the cost of a new nuclear plant, Shugar said.
"If you look at the dollars per megawatt hour of solar compared to coal or nuclear, it’s way less even if you add a bunch of batteries onto the solar," Shugar said.
Solar soars
California led the US in solar capacity with 19.98 GW by the end of 2023, up 13% year on year, according to ACP. Texas closely followed with 18.364 GW of solar capacity, up 48% year on year.
The California Independent System Operator (CAISO), which manages the flow of electricity for about 80% of California and a small part of Nevada, has over 5 GW of solar projects in its generation queue that have completed interconnection agreements and are slated to come online this year.
Texas saw a significant shift from mostly installing wind in 2022 toward solar and storage in 2023, according to ACP.
The Electric Reliability Council of Texas (ERCOT), which manages the flow of electric power for about 90% of the state’s electric load, expects its solar capacity to jump from 30.8 GW in 2024 to over 50.1 GW in 2025.
The majority of new solar plants have battery storage connected.
Solar and storage had a record year in 2023, with solar accounting for 58% of all new capacity additions and storage making up 23%, according to ACP. Developers brought 3.469 GW of new energy storage projects online in Q4, more than three times the amount from 2022.
Battery storage
Total operating US battery storage capacity ended 2023 with 17.375 GW, up 73% from the end of 2022, according to an S&P Global compilation of government filings and company announcements. The data includes facilities that either began commercial operation or were synchronized to the grid.
Another 5.1 GW of capacity is expected to be operational in the first quarter, continuing the rapid growth of battery storage across the country.
By the end of Q4 2023, there were 18.308 GW of battery storage in advanced development, and 11.935 GW under construction, according to ACP.
California leads the US in battery storage capacity with 8.107 GW, up 64% year on year, followed by Texas with 4.587 GW, up 141%, according to ACP.
CAISO has 3.5 GW of battery storage in its generation queue that have completed interconnection agreements and are slated to come online this year, with an additional 3.2 GW connected to solar projects.
ERCOT expects its battery capacity to grow from 11.6 GW in 2024 to over 21 GW in 2025.
Renewable project pipeline
"Despite the overall expansion of the project pipeline, the different technologies did not grow at the same rate," ACP said. "Battery storage was a bright spot in 2023, as the pipeline capacity for battery storage projects grew by 13.5 GW, overtaking land-based wind as the technology with the second highest pipeline capacity."
For comparison, utility-scale solar saw an increase of 14.2 GW, while the pipeline capacities for land-based wind and offshore wind grew by 6 GW and 1.8 GW, respectively, according to ACP.
Regionally, ERCOT will add the most clean energy again in 2024 with about 5.5 GW of solar, 1 GW of wind and 2.5 GW of batteries, Huntington said.
"ERCOT’s place atop the leaderboard can be attributed to its fantastic solar and wind resource, favorable market fundamentals, and speedy interconnection process," Huntington said. "Other regions to watch include MISO-north, which is adding several gigawatts of both wind and solar, and PJM-west, which is becoming a new hot spot for utility-scale solar."
This article was first published in the April 2024 issue of Commodity Insights Magazine.
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