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Renewable energy dominates power project spending in the United States and Canada, but a perfect storm of impediments threatens to slow the growth of solar and wind generation capacity, according to Britt Burt, Industrial Info Resources’ vice president of research for the global power industry.
Burt was one of the speakers at Industrial Info’s Mid-Year U.S. & Canada Industrial Market Outlook event in May. Industrial Info tracks a wide variety of power-related projects, including grassroot plants and expansions, he said, “but we pride ourselves in finding hard-to-find projects such as modernizations, upgrades, refurbishments and maintenance activity.”
In the United States, Industrial Info Resources (IIR) is tracking more than 3,000 power projects listing pipe, valves and fittings (PVF) among their key equipment needs (see Figure 1) — worth more than $500 billion.
Much of the grassroot and expansion project activity tracked by IIR is from renewable energy resources, Burt explained. Much of the growth in the sector has been prompted by state-level renewable portfolios and clean energy standards. Last year, five states expanded or initiated ambitious renewable energy targets, with Nebraska and North Carolina calling for renewable sources to make up 100 percent of their portfolio.
Meanwhile, coal-fired power continues its decline, he said. From 2012 to 2021, 110 gigawatts (GW) of coal-fired power were retired, and another 70 GW is expected to be retired from 2022 through 2030. Much of this lost capacity was replaced by natural-gas generation.
“I think the most troubling thing here is the nuclear capacity we are closing,” he continued, saying about 10 GW was retired during the past 10 years and 13 GW is earmarked for closure over the next eight years.
“I find it hard to believe we are going to get to zero carbon (emissions) without adding some nuclear capacity,” Burt said.
Also during the last 10 years, the United States and Canada added 94 GW of wind power capacity and 52 GW of grid-scale solar power, he said.
Renewable Power Construction Slows Down
However, construction kickoffs for wind power projects peaked in 2019, while solar power kickoffs also appear to have peaked. Various factors — among them the COVID-19 pandemic, supply-chain problems, lack of skilled workers, tariffs on imported materials and landowner pushback — have combined to dramatically slow the completion of wind and solar energy projects in the United States, according to IIR’s Global Marketing Intelligence platform.
The number of completed U.S. wind and solar projects peaked at 240 in 2019 before plummeting to 66 in 2021. Meanwhile, U.S. wind and solar projects that were canceled or deferred rose from 95 in 2018 to 155 in 2021.
The total investment value (TIV) of the country’s completed wind and solar projects peaked at $46.2 billion in 2019 before falling to $33.3 billion in 2020 and $7.5 billion last year. Meanwhile, the dollar value of renewable energy projects canceled or deferred was triple the value of completed projects in 2021.
Part of the slowdown in renewable energy completions could be because, after a prolonged period of heavy development, many of the best, most economical sites already have been developed.
Also, as states attain their renewable portfolio standards, they may ease off efforts to obtain more renewable energy (see Figure 2).
Burt listed a number of factors threatening to slow the future growth of renewable power capacity.
One of the main hurdles cited by Burt is supply-chain disruptions. He noted that the Biden administration has maintained U.S. import tariffs on Chinese solar panels originally put in place under the Trump administration.
An investigation by the U.S. Department of Commerce is centered on suspicions that China was funneling solar components through Malaysia, Cambodia, Thailand and Vietnam in order to skirt the tariffs. The Southeast Asia countries account for most of the panels imported by the United States, and the outcome of the investigation could lead to hundreds of solar projects being delayed, Burt said.
Within weeks of the Commerce Department’s announcement earlier this year, many members of the Solar Energy Industries Association (SEIA) said their expected imports of solar modules from those countries were delayed or canceled.
In an online event April 5, SEIA President and Chief Executive Officer Abigail Ross Hopper said of the investigation’s chilling effect, “We’re already seeing a rapid degeneration of the U.S. solar industry as panel suppliers stop shipping to the United States.” The group surveyed more than 400 of its members; 78 percent said their expected module supply has been delayed or canceled since the anti-dumping investigation began.
This isn’t good for utilities and solar developers looking to keep costs down and have timely access to supplies for their projects.
In an April earnings conference call, Kirk Crews, the chief financial officer of NextEra Energy, which is constructing a substantial buildout of solar facilities in Florida and elsewhere, said: “We are disappointed by the Commerce Department’s decision to conduct this investigation. We believe [it] already settled this issue when it concluded in 2012 that the process of converting solar wafers into electricity-producing solar cells is technologically sophisticated and the most capital-intensive part of the solar panel manufacturing process. When it occurs outside of China, the cells are not subject to the 2012 anti-dumping and countervailing duties applicable to Chinese solar cell imports.
“The Commerce Department’s later rulings in 2014, 2020 and 2021 are consistent with this and are relied upon by the solar industry as it continued to invest billions of dollars in new solar-generating facilities in the United States over this period.”
Inflation poses another impediment to growth. “The cost reductions we’ve seen in renewable energy in the past few years have all but been erased by inflation,” Burt noted.
Solar power “represents about $109 billion worth of projects scheduled to kick off over the next couple of years, but I’m seeing more of those being pushed into the future,” he said. Of that dollar amount, $65 billion has been pushed at least a month beyond its original kickoff date, “but those that have been pushed out a year or more are about 40 percent of our overall numbers.”
On the wind power side, most of the development has been land-based, spurred on by the federal production tax credit, Burt explained, but the credit expired, causing anxiety regarding whether and when it will be renewed. The situation will lead to more project delays in the future.
The Biden administration set a target for the United States to build 30 GW of offshore wind capacity by 2030, but Burt said he sees “a couple of problems with that.”
First, “we don’t have any ships to install the turbines,” he said. Dominion Energy recently ordered the first Jones Act-compliant offshore wind installation vessel. The Jones Act is a federal law regulating maritime commerce in the United States.
Also, it took Europe about 20 years to install 30 GW of offshore power, “and they are quite good at it and have a lot of vessels,” he continued.
Challenges to Battery Storage
Battery storage plays a crucial role in the further development of renewable power, but it has its own issues.
The biggest challenge stems from the lithium-ion technology used to store power. Burt said there would be a lot more competition for lithium because North America’s growing electric vehicle fleet uses lithium-ion technology. This could lead to supply problems.
“The other issue with lithium-ion is the discharge range is only about four hours,” Burt said. “That doesn’t give us a long time.”
Whether other technologies can increase the discharge time remains to be seen.