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Released January 20, 2023 | SUGAR LAND
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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--The incentives for renewable energy outlined in U.S. President Joe Biden's signature Inflation Reduction Act (IRA) could lead to a 78% increase in investments in low-carbon energy, analysis from Wood Mackenzie (Edinburgh, Scotland) finds.
Wood Mac estimates incentives in alternative forms of energy outlined in the IRA could lead to an increase in investments from $64 billion last year to nearly $114 billion by 2031.
Daniel Liu, the Wood Mac analyst behind the research, said the IRA is creating profound changes across U.S. manufacturing and the supply chain.
"The IRA will completely reshape the renewables supply chain in the US, incentivizing the reopening of shuttered facilities as well as provide opportunities to build entire equipment supply chains from scratch."
Starting from scratch is particularly attractive for offshore wind, the research suggests. Tax credits offered for U.S.-made equipment should support near-term advantages in the emerging sector.
The U.S. Bureau of Ocean Energy Management (BOEM) last year outlined areas off the coast of Texas and Louisiana for potential wind energy developments. The government believes the combined 682,500 acres have the potential to power an estimated 2.8 million homes.
Amanda Lefton, the BOEM's director, said the legacy of the region's offshore industry should be accommodative to growth in the renewable energy sector as well. Onshore, meanwhile, Texas boasts the largest wind energy footprint in the continental United States, which could help with the offshore buildup.
The Biden administration set a goal of deploying 30 gigawatts (GW) of offshore wind energy capacity by 2030. As of now, there are only two offshore wind installations working at utility scale--the Block Island facility offshore Rhode Island and the Coastal Virginia Offshore Wind installation. Combined, those two facilities generate about 42 megawatts of power.
Offshore leases last year helped lead to a 13.5% increase in planned wind energy developments relative to 2020 levels, with some 40 GW in various stages of development.
But even if goals outlined by the Biden administration are reached, the United States will still be far behind the rest of the world in terms of wind energy development even with its vast coastal acreage. The distinction of global leadership goes to China. All of the wind energy capacity installed now in the United States represents less than half of what's operating now in China.
Wood Mackenzie remains optimistic, however, that the support offered in the IRA will create a sea change as regional manufactures jump at the chance for incentives to build offshore. The consultant group, however, is not so optimistic about solar.
"With such a small solar manufacturing base currently in the region, juxtaposed against substantial forecasted growth in solar additions, fully meeting U.S. solar needs with domestic equipment will be more challenging than other sectors," Liu said.
But there too, foreign investors are moving into the domestic sector. BP plc (NYSE:BP) (England) London, started construction on a solar power facility in Ohio that has a design capacity to meet the demand of around 20,000 average U.S. households. That was followed by a $2.5 billion investment in a solar panel plant in Georgia from South Korea-based Hanwha Qcells, which Biden said was the largest investment of its kind in the nation's history. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can click here for more details on the Ohio project, and click here for the related Georgia project reports.
The U.S. Energy Information Administration, the statistics office of the Department of Energy, expects slow, but steady gains in renewables. The total share on the grid is expected to increase from 21% in 2022 to 26% by 2024, with solar accounting for about 30% of the total gain.
New investments, meanwhile, should support continued growth. The U.S. energy sector in some respects is behind the rest of the world on renewables as the focus now is on lingering supply-side challenges that came as a result of the war on Ukraine.
Just as the Marshall Plan reshaped the U.S. role on the global stage after the shock of World War II, the COVID-19 pandemic and the war in Ukraine are facilitating a sea change in the global energy sector.
Subscribers can click here for the project reports referenced in this article and click here for the related plant profiles.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
Wood Mac estimates incentives in alternative forms of energy outlined in the IRA could lead to an increase in investments from $64 billion last year to nearly $114 billion by 2031.
Daniel Liu, the Wood Mac analyst behind the research, said the IRA is creating profound changes across U.S. manufacturing and the supply chain.
"The IRA will completely reshape the renewables supply chain in the US, incentivizing the reopening of shuttered facilities as well as provide opportunities to build entire equipment supply chains from scratch."
Starting from scratch is particularly attractive for offshore wind, the research suggests. Tax credits offered for U.S.-made equipment should support near-term advantages in the emerging sector.
The U.S. Bureau of Ocean Energy Management (BOEM) last year outlined areas off the coast of Texas and Louisiana for potential wind energy developments. The government believes the combined 682,500 acres have the potential to power an estimated 2.8 million homes.
Amanda Lefton, the BOEM's director, said the legacy of the region's offshore industry should be accommodative to growth in the renewable energy sector as well. Onshore, meanwhile, Texas boasts the largest wind energy footprint in the continental United States, which could help with the offshore buildup.
The Biden administration set a goal of deploying 30 gigawatts (GW) of offshore wind energy capacity by 2030. As of now, there are only two offshore wind installations working at utility scale--the Block Island facility offshore Rhode Island and the Coastal Virginia Offshore Wind installation. Combined, those two facilities generate about 42 megawatts of power.
Offshore leases last year helped lead to a 13.5% increase in planned wind energy developments relative to 2020 levels, with some 40 GW in various stages of development.
But even if goals outlined by the Biden administration are reached, the United States will still be far behind the rest of the world in terms of wind energy development even with its vast coastal acreage. The distinction of global leadership goes to China. All of the wind energy capacity installed now in the United States represents less than half of what's operating now in China.
Wood Mackenzie remains optimistic, however, that the support offered in the IRA will create a sea change as regional manufactures jump at the chance for incentives to build offshore. The consultant group, however, is not so optimistic about solar.
"With such a small solar manufacturing base currently in the region, juxtaposed against substantial forecasted growth in solar additions, fully meeting U.S. solar needs with domestic equipment will be more challenging than other sectors," Liu said.
But there too, foreign investors are moving into the domestic sector. BP plc (NYSE:BP) (England) London, started construction on a solar power facility in Ohio that has a design capacity to meet the demand of around 20,000 average U.S. households. That was followed by a $2.5 billion investment in a solar panel plant in Georgia from South Korea-based Hanwha Qcells, which Biden said was the largest investment of its kind in the nation's history. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can click here for more details on the Ohio project, and click here for the related Georgia project reports.
The U.S. Energy Information Administration, the statistics office of the Department of Energy, expects slow, but steady gains in renewables. The total share on the grid is expected to increase from 21% in 2022 to 26% by 2024, with solar accounting for about 30% of the total gain.
New investments, meanwhile, should support continued growth. The U.S. energy sector in some respects is behind the rest of the world on renewables as the focus now is on lingering supply-side challenges that came as a result of the war on Ukraine.
Just as the Marshall Plan reshaped the U.S. role on the global stage after the shock of World War II, the COVID-19 pandemic and the war in Ukraine are facilitating a sea change in the global energy sector.
Subscribers can click here for the project reports referenced in this article and click here for the related plant profiles.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
