Renewable energy has had a bumpy ride in the US so far this year, thanks in large part to policy failures in government at the federal level. Most of us hate politics and politicians. Many would prefer unfettered economic competition to sort things out.
But in the real world, government policies play an enormous role in how business gets done. 40 years ago, everyone was moaning how Japan was taking over the world. The close collaboration between the government and industry resulted in what many derisively called Japan, Inc. Today, China is eating everyone’s lunch when it comes to electric cars, battery manufacturing, and solar panels because its government has aggressively promoted policies that favor them.
Renewable Energy Crash In 2022
Renewable energy in the US has exploded in the past decade largely because of government incentives that reward those who invest in renewables like wind and solar with substantial tax savings. Yet just when things were going so well, American Clean Power reports renewable installations fell off a cliff in the first half of 2022. Why? Because of confusion and anxiety about federal policy support, due largely to the intransigence of alleged senator Joe Manchin, who time and time again torpedoed initiatives by the Biden administration to support clean energy policies.
Yeah, Greedy Joe is a hero now, after he found out he was being shunned by his colleagues and the folks back home in West By God Virginia who had a bellyful of Joe’s stonewalling antics. So Manchin has suddenly got religion, but in the meantime, his obstructionism was the primary reason for the fall-off in wind and solar installations so far this year. What business wants is predictability, not an on again, off again charade from some hillbilly who has gotten too big for his britches.
ACP reports, “Clean power installations slowed in the second quarter of the year, with 3,188 MW of new clean power capacity commissioned. This marks a 55% decline from the same period last year. The industry installed 41 solar projects, 14 storage projects, and five wind projects across 27 states. The accompanying graph makes clear how severe the impact of policy gridlock in Washington was.
“Congressional inaction and uncertainty on long-term tax policy, tariff and trade restrictions, and transmission constraints all impact the demand for clean energy at a time when we need to be rapidly scaling up development,” Heather Zichal, head of ACP, tells Reuters.
Onshore wind power installations fell 78% due to supply chain induced slow-downs and delays in power grid interconnections. Since the end of 2021, more than 32.4 gigawatts of clean power projects have been delayed, enough energy to power 6.5 million homes and support 110,000 jobs, the ACP report says.
Grid Scale Storage Is A Bright Spot
One ray of sunshine in the gloomy renewable energy picture is grid scale energy storage, which saw a 4-fold increase in Q1 2022 from the first quarter of 2021, according to ACP. “Quarter one of 2022 was the largest first quarter on record by far for grid scale installations, a notable milestone since installations are typically back-weighted to the second half of the year. The West Coast and Southwest regions continue to dominate for both standalone and hybrid systems,” said Vanessa Witte, senior analyst with Wood Mackenzie’s energy storage team.
Despite significant growth, ACP says near-term risks remain for the grid scale market. Market disruption from the anti-dumping and countervailing duties solar tariff investigation initiated by the Department of Commerce in March lowered projects for hybrid projects significantly in 2022, and to a lesser extent in 2023, as procurement stalled.
“The Biden Administration’s recent decision to pause AD/CVD solar tariffs for two years restores predictability to both the solar and energy storage markets. With well over 50% of utility storage projects being paired with solar farms, this important executive action will help the energy storage market continue to accelerate,” said John Hensley, Vice President of Research and Analytics at ACP.
Residential storage also had its strongest quarter to date with 334 MWh installed in Q1, beating the previous quarterly record of 283 MWh in Q4 of last year. “Despite challenging supply conditions continuing to suppress residential storage, the segment saw over 20,000 installations in a single quarter for the first time and we’re seeing large and small installers forge new vendor partnerships to help meet rising customer demand,” said Chloe Holden, analyst with Wood Mackenzie. Overall, the US energy storage market added 955 MW and 2,875 MWh across all segments in the first quarter of 2022.
Policies and politics matter. The US has lost critical momentum towards its renewable energy goals because of a lack of clear policies, thanks in large part to the mulish obstinance of one person. Now the logjam has been broken — or so it seems. It’s time to get back to the business of making renewable energy that provides free electricity to all American homes and businesses a reality. If America aspires to be a leading nation, clean energy will be the key that makes that possible.
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