Released June 10, 2024 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--U.S. solar power project development slowed sharply in 2023, according to data tracked by Industrial Info. Solar still is hot, but it's not as hot as it used to be, as a growing number of projects have been cancelled or placed on hold.
Last year, for the first time in at least a decade, the number of U.S. solar projects that were cancelled or placed on hold outnumbered the number of solar projects that were completed. In the early years of the Electric Power Industry's "run to the sun," completed projects exceeded cancelled/on hold projects by a 3-to-1 ratio or better.
While 2023 might prove to be an anomaly, it is clear that the number of cancelled/on hold solar projects has been steadily rising over nearly a decade. In 2023, the total investment value (TIV) of projects cancelled or placed on hold totaled nearly $27 billion, far more than the TIV of projects that had been completed. In 2022, the TIV of cancelled/on hold solar projects also exceeded the value of completed projects, though the margin was much narrower.
Since 2015, approximately 442 U.S. proposed solar projects have been cancelled. The dollar value of those cancelled projects is about $52.35 billion. In rank order, the states with the highest cumulative dollar value of cancelled solar projects between 2015 and 2023 were Arizona, Texas, California and Nevada.
By contrast, the number of solar projects that were placed on hold since 2015, and their cumulative TIV, is much lower than the projects that have been cancelled. According to IIR's Global Market Intelligence (GMI) platform, about 260 proposed solar projects have been placed on hold since 2016. The total value of those projects is roughly $27.8 billion. In rank order, the states with the largest dollar value of "on hold" solar projects are Texas, California, Nevada and North Carolina.
"Across all the industries IIR tracks, we never expect that all projects that are announced will follow their proposed schedule," said Britt Burt, IIR's vice president of research for the global Power Industry. "Projects are added, cancelled or placed on hold every day by our researchers. In the Electric Power industry, this is especially true, as we have seen a staid industry become very dynamic over the last decade or two."
"It's not particularly surprising that the states that have most actively sought to develop solar generation, including Arizona, Texas, California and Nevada, are the states near the top of the list with project cancellations or proposed projects being placed on hold."
The dynamism of the U.S. power market means that some of the solar projects that are placed on hold could become active again, once the reasons for the delays are resolved, Burt continued. Those steps could include unkinking the solar supply chain, expanding the supply of skilled craft labor, securing permits or commercial financing or landing federal grant money from the Inflation Reduction Act of 2022 (IRA). A good bit of the hundreds of billions in federal support for renewable energy has yet to be disbursed, he said.
"To some extent, I think we're also still dealing with the after-effects of the COVID-19 pandemic," Burt continued. "Not all the skilled craft workers who left the industry have returned, and it takes time to develop a workforce with the required skills to replace those who have left."
But one factor that is not easily resolved is the growing sense of "Not in My Backyard," or NIMBY, sentiment that has stymied solar project development. Often, those who oppose renewable energy projects express support for the concept of emissions-free electricity. But the amount of land needed to construct a utility-scale renewable generation project, generally defined as 1 megawatt or greater, causes people to turn against projects.
Also, unlike wind farms, solar farms don't allow for cattle grazing or farming around the solar panels. Windfarms, by contrast, typically execute land leases that permit grazing if they are sited on farms or ranchland. Wind developers have used the promise of land lease income to farmers and ranchers as a way to overcome their opposition and permit the construction of a windfarm.
Planned solar farms in the Western U.S. have run into land-lease restrictions, sometimes temporary ones, that specifically forbid solar project development in certain areas. An article in The Denver Post said at least 10 counties in Colorado have temporarily halted solar development, which is raising concern about the state's ability to meet Governor Jared Polis' goal of having renewable resources generate 100% of the state's electricity by 2040.
"The fast expansion of large-scale solar projects, fueled in part by record federal investment, has prompted a wave of county governments to pass moratoriums on the construction of new facilities, often in response to local opposition," the Post reported.
Looking forward rather than backward, IIR's Global Market Intelligence (GMI) platform shows that about 129 solar projects scheduled to begin construction this year have been cancelled or placed on hold. But, in a possible reversion to earlier years, the number of cancelled/on hold projects is far smaller than the number of projects that are currently scheduled to begin construction this year. Going out to 2028, the number of cancelled/on hold projects shrinks steadily compared to active projects.
Project reports in IIR's GMI platform contain brief explanations of why a project was cancelled or placed on hold. Inability to secure permits or financing, or a change in market conditions are some of the common reasons for a project being cancelled or placed on hold. But "other constraints" was listed far more often. That could mean a shortage of skilled craft labor or equipment. The yearslong tariff on Chinese solar materials, which could skew a project's economics, could also fall into the "other constraints" category.
"Any industry that grows as rapidly as the solar industry has can expect to have some growth pains, and that may be what we're seeing now with U.S. solar project development," IIR's Burt said. "We're keeping an eye on solar projects being cancelled or placed on hold to see if it becomes a trend."
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) platform 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).
Last year, for the first time in at least a decade, the number of U.S. solar projects that were cancelled or placed on hold outnumbered the number of solar projects that were completed. In the early years of the Electric Power Industry's "run to the sun," completed projects exceeded cancelled/on hold projects by a 3-to-1 ratio or better.
While 2023 might prove to be an anomaly, it is clear that the number of cancelled/on hold solar projects has been steadily rising over nearly a decade. In 2023, the total investment value (TIV) of projects cancelled or placed on hold totaled nearly $27 billion, far more than the TIV of projects that had been completed. In 2022, the TIV of cancelled/on hold solar projects also exceeded the value of completed projects, though the margin was much narrower.
Since 2015, approximately 442 U.S. proposed solar projects have been cancelled. The dollar value of those cancelled projects is about $52.35 billion. In rank order, the states with the highest cumulative dollar value of cancelled solar projects between 2015 and 2023 were Arizona, Texas, California and Nevada.
By contrast, the number of solar projects that were placed on hold since 2015, and their cumulative TIV, is much lower than the projects that have been cancelled. According to IIR's Global Market Intelligence (GMI) platform, about 260 proposed solar projects have been placed on hold since 2016. The total value of those projects is roughly $27.8 billion. In rank order, the states with the largest dollar value of "on hold" solar projects are Texas, California, Nevada and North Carolina.
"Across all the industries IIR tracks, we never expect that all projects that are announced will follow their proposed schedule," said Britt Burt, IIR's vice president of research for the global Power Industry. "Projects are added, cancelled or placed on hold every day by our researchers. In the Electric Power industry, this is especially true, as we have seen a staid industry become very dynamic over the last decade or two."
"It's not particularly surprising that the states that have most actively sought to develop solar generation, including Arizona, Texas, California and Nevada, are the states near the top of the list with project cancellations or proposed projects being placed on hold."
The dynamism of the U.S. power market means that some of the solar projects that are placed on hold could become active again, once the reasons for the delays are resolved, Burt continued. Those steps could include unkinking the solar supply chain, expanding the supply of skilled craft labor, securing permits or commercial financing or landing federal grant money from the Inflation Reduction Act of 2022 (IRA). A good bit of the hundreds of billions in federal support for renewable energy has yet to be disbursed, he said.
"To some extent, I think we're also still dealing with the after-effects of the COVID-19 pandemic," Burt continued. "Not all the skilled craft workers who left the industry have returned, and it takes time to develop a workforce with the required skills to replace those who have left."
But one factor that is not easily resolved is the growing sense of "Not in My Backyard," or NIMBY, sentiment that has stymied solar project development. Often, those who oppose renewable energy projects express support for the concept of emissions-free electricity. But the amount of land needed to construct a utility-scale renewable generation project, generally defined as 1 megawatt or greater, causes people to turn against projects.
Also, unlike wind farms, solar farms don't allow for cattle grazing or farming around the solar panels. Windfarms, by contrast, typically execute land leases that permit grazing if they are sited on farms or ranchland. Wind developers have used the promise of land lease income to farmers and ranchers as a way to overcome their opposition and permit the construction of a windfarm.
Planned solar farms in the Western U.S. have run into land-lease restrictions, sometimes temporary ones, that specifically forbid solar project development in certain areas. An article in The Denver Post said at least 10 counties in Colorado have temporarily halted solar development, which is raising concern about the state's ability to meet Governor Jared Polis' goal of having renewable resources generate 100% of the state's electricity by 2040.
"The fast expansion of large-scale solar projects, fueled in part by record federal investment, has prompted a wave of county governments to pass moratoriums on the construction of new facilities, often in response to local opposition," the Post reported.
Looking forward rather than backward, IIR's Global Market Intelligence (GMI) platform shows that about 129 solar projects scheduled to begin construction this year have been cancelled or placed on hold. But, in a possible reversion to earlier years, the number of cancelled/on hold projects is far smaller than the number of projects that are currently scheduled to begin construction this year. Going out to 2028, the number of cancelled/on hold projects shrinks steadily compared to active projects.
Project reports in IIR's GMI platform contain brief explanations of why a project was cancelled or placed on hold. Inability to secure permits or financing, or a change in market conditions are some of the common reasons for a project being cancelled or placed on hold. But "other constraints" was listed far more often. That could mean a shortage of skilled craft labor or equipment. The yearslong tariff on Chinese solar materials, which could skew a project's economics, could also fall into the "other constraints" category.
"Any industry that grows as rapidly as the solar industry has can expect to have some growth pains, and that may be what we're seeing now with U.S. solar project development," IIR's Burt said. "We're keeping an eye on solar projects being cancelled or placed on hold to see if it becomes a trend."
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) platform 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).
