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Researched by Industrial Info Resources (Sugar Land, Texas)--Renewable energy dominates power project spending in the U.S. 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's 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 on Wednesday. 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."
Much of the grassroot and expansion project activity being tracked by Industrial Info is from renewable energy resources, predominately solar and wind, he noted. 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% of their portfolio.
To the amusement of the outlook event's attendees, Burt wryly noted some recent "small victories" for renewable energy: "A few weeks ago, California excitedly announced they were at 96% renewable energy for a grand total of about 11 minutes, and just last week I saw that the entire nation got 20% renewable energy for a few moments."
Meanwhile, coal-fired power continues its decline, he said. From 2012 to 2021, 110 gigawatts (GW) of coal-fired power was 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 how we are going to get to zero carbon without adding some nuclear capacity," Burt said.
Also during the last 10 years, the U.S. and Canada added 94 GW of wind power capacity and 52 GW of grid-scale solar power, he said.
However, construction kickoffs for wind power projects peaked in 2019, while solar power kickoffs appear to have peaked last year with about $28.5 billion worth of project spending. For more information, see April 21, 2022, article - Renewable Power Project Completions Slow Sharply in U.S.
Burt listed a number of factors that threaten to slow the 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 that were 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 80% of the panels imported by the U.S., and the outcome of the investigation could lead to hundreds of solar projects being delayed, Burt said. For more information, see May 18, 2022, article - Commerce Department Probe Shakes Up U.S. Solar Industry.
Other hurdles for renewable energy projects include labor shortages, regulatory delays, grid congestion and inflation. Burt said: "The cost reductions that we've seen in renewable energy in the past few years have all but been erased by inflation."
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," Burt 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, that's about 40% 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 said, but that credit has expired, causing anxiety regarding whether and when it will be renewed. The situation will lead to more project delays going forward, he said.
The Biden administration has set a target for the U.S. 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 Incorporated (NYSE:D) (Richmond, Virginia) recently ordered the first Jones Act-compliant offshore wind installation vessel, he noted. (The Jones Act is a federal law that regulates maritime commerce in the U.S.)
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 will 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 rate 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.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
Burt was one of the speakers at Industrial Info's Mid-Year U.S. & Canada Industrial Market Outlook event on Wednesday. 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."
Much of the grassroot and expansion project activity being tracked by Industrial Info is from renewable energy resources, predominately solar and wind, he noted. 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% of their portfolio.
To the amusement of the outlook event's attendees, Burt wryly noted some recent "small victories" for renewable energy: "A few weeks ago, California excitedly announced they were at 96% renewable energy for a grand total of about 11 minutes, and just last week I saw that the entire nation got 20% renewable energy for a few moments."
Meanwhile, coal-fired power continues its decline, he said. From 2012 to 2021, 110 gigawatts (GW) of coal-fired power was 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 how we are going to get to zero carbon without adding some nuclear capacity," Burt said.
Also during the last 10 years, the U.S. and Canada added 94 GW of wind power capacity and 52 GW of grid-scale solar power, he said.
However, construction kickoffs for wind power projects peaked in 2019, while solar power kickoffs appear to have peaked last year with about $28.5 billion worth of project spending. For more information, see April 21, 2022, article - Renewable Power Project Completions Slow Sharply in U.S.
Burt listed a number of factors that threaten to slow the 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 that were 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 80% of the panels imported by the U.S., and the outcome of the investigation could lead to hundreds of solar projects being delayed, Burt said. For more information, see May 18, 2022, article - Commerce Department Probe Shakes Up U.S. Solar Industry.
Other hurdles for renewable energy projects include labor shortages, regulatory delays, grid congestion and inflation. Burt said: "The cost reductions that we've seen in renewable energy in the past few years have all but been erased by inflation."
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," Burt 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, that's about 40% 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 said, but that credit has expired, causing anxiety regarding whether and when it will be renewed. The situation will lead to more project delays going forward, he said.
The Biden administration has set a target for the U.S. 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 Incorporated (NYSE:D) (Richmond, Virginia) recently ordered the first Jones Act-compliant offshore wind installation vessel, he noted. (The Jones Act is a federal law that regulates maritime commerce in the U.S.)
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 will 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 rate 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.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
