American Clean Power’s (ACP) Quarterly Clean Energy Market Report for Q2 2022 shows the rate of clean energy deployment slowed significantly in Q2 as political headwinds, economic factors facing industry and commercial issues have impacted project development and increased the backlog of new project delays.
During the second quarter, the industry saw a 55% decline in project installations compared to the same period in 2021, with 3,188 MW of utility-scale clean energy capacity installed.
This makes the second quarter the lowest quarter for clean energy capacity additions since the third quarter of 2019.
“We have warned of the storm of political and economic headwinds facing the clean energy industry, and this is a step in the wrong direction,” said Heather Zichal, CEO of ACP. “Congress’s inaction and uncertainty over long-term fiscal policy, tariff and trade restrictions, and transmission constraints are all impacting demand for clean energy at a time when we need to rapidly scale up development. Our member companies are ready to make the investment decisions needed to build America’s clean energy economy, but the current business and political environment is slowing the pace of deployment.
Additional market headwinds impacting the pace of development include commodity prices, COVID pandemic-related delays, supply chain issues, and increased operating costs.
Energy storage is the only technology to see growth, with a 13% increase in installations. Solar installations decreased by 53% compared to the same quarter in 2021. Regarding onshore wind installations, they decreased by 78% compared to the same period last year.
Project developers uploaded 60 new projects to the network in the second quarter, representing $4.3 billion in capital investment. The industry installed 3,188 MW of new capacity from 41 solar projects, 14 storage projects and 5 wind projects in 27 states. Total installations for the year now stand at 9,795 MW, compared to more than 13,000 MW of projects commissioned in the first half of 2021.
The total clean energy capacity in operation in the country now exceeds 211 GW, enough to power 58 million homes in America. Broken down by technology, clean energy capacity in operation is comprised of 139,143 MW of onshore wind; 65,749 MW of solar; 42 MW of offshore wind; and 6,471 MW/16,792 MWh of battery storage capacity.
The myriad of challenges facing the industry continue to impact project development. While the industry currently has a record amount of potential clean energy capacity under development, the rate of growth is slowing. The project track only grew 4% in Q1 and 3% in Q2, much slower than the 12% average quarterly growth seen throughout 2021.
During the second quarter, the industry began construction on 3,964 MW of projects, while 7,000 MW entered advanced development. There are 1,155 ongoing projects with a total capacity of 128,889 MW. This includes 40,656 MW under construction and 88,233 MW in advanced development.
Since the end of 2021, more than 32.4 GW of clean energy projects have been delayed and have not yet reached commercial operation. That’s enough energy to power 6.5 million homes and support 110,000 jobs, and it represents an investment of $45 million, much of which goes to local communities.
Solar projects are the most prone to delays, with nearly 21 GW of solar projects currently delayed – much of which is the direct result of misguided business actions. Solar accounts for 64% of all delayed projects. Wind accounts for 17% of total delays in Q1 2022 and battery storage accounts for 21% of delays.
This was compounded by first quarter project delays, which included over 7GW of delayed projects. An additional 8 GW of clean power that was due to come online in the second quarter has also been delayed.
Despite regulatory headwinds, solar continues to be the leading technology under development, accounting for 57% of all clean energy capacity under development. Onshore wind represents 18% of the pipeline, offshore wind represents 14% and storage represents the remaining 11%.
The second quarter also saw a drop from the previous quarter in terms of projects starting construction or entering advanced stages of development – a key indicator of additional challenges throughout the year.
The prospects for these projects moving from development to built deployment are unclear without congressional action.
Texas leads all states in development activity with 23,665 MW in progress, representing 18% of the total development pipeline. The other leading states for project development are California (13,710 MW), New York (10,809 MW), Indiana (7,099 MW) and Virginia (6,456 MW).
The largest projects to come online in the second quarter include the 260 MW DeCordova energy storage project in Granbury, Texas. Owned by Vistra Corp., the facility includes more than 3,000 lithium-ion battery modules.
RWE’s Hickory Park Solar + Storage was the largest hybrid project to come online this quarter. Located in Georgia, the project includes 196 MW of solar capacity and 40 MW/80 MWh of battery storage capacity.
The 201 MW Golden Hills wind project, owned and developed by Avangrid, was the largest wind project to come online. The Oregon project uses Vestas and GE Renewables wind turbines.
A bright spot in the report is the increased supply of clean energy. Supply activity accelerated in the quarter, with companies announcing 8,502MW of new power purchase agreements (PPAs), a 35% increase from the previous quarter and 27% compared to the second quarter of 2021.
Solar remains the dominant technology of choice for new PPAs, accounting for 71% of all PPA announcements in the second quarter and 78% of PPA announcements for the year.
Commercial and industrial (C&I) buyers accounted for 5,654 MW of new PPAs this quarter, a notable increase of 71% over the prior quarter. The top business buyers in the second quarter were Amazon (3,200 MW), Microsoft (615 MW) and Verizon (525 MW).
There was a drop in PPA announcements from utilities, with 1,095 MW of contracted capacity announced. Despite declining utility PPA announcements, it continues to be a seller’s market for renewables. Demand continues to grow as utilities seek to decarbonize their electricity mix, while more companies seek to meet their sustainability goals.
Major utility PPAs announced this quarter include CenterPoint Energy (335 MW), South Carolina Public Service Authority (205 MW) and CMS Energy (150 MW).
Read the full report here.