Clean power installations hampered by supply and trade issues cool in Q3 of 2022
Energize Weekly, November 9, 2022
Wind, solar and storage installations for the third quarter of 2022 were the lowest in three years as developers struggled with supply chain and trade restrictions, according to a market report from the American Clean Power Association (ACP).
A total of 3.4 gigawatts (GW) of new capacity came online in the quarter, down 22 percent from the same period in 2021. That brought total 2022 installations to 14.2 GW – an 18 percent decline compared to the same period in 2021.
The projects for the year represent $4.6 billion in investment, the ACP, an industry trade group, said.
“Difficulty sourcing solar panels and supply chain constraints have proved to be major barriers for projects. Interconnection challenges and the previous phase-down schedule of the production tax credit (PTC) are at work, as well,” the association said.
Two laws limiting access to solar panels from areas know to use forced labor – the Withhold Release Order and Uyghur Forced Labor Prevention Act – has “effectively removed a significant supply from the U.S. market,” the report said.
The PTC, which provides a tax credit based on the amount of electricity a wind project generates, was phased out in 2021, but restored in 2022 under the Inflation Reduction Act.
There were 60 utility-scale projects in 19 states brought online in the third quarter of 2022. California was home to more than 40 percent of the new capacity – 1.4 GW – followed by Texas with 1.2 GW.
Solar projects dominated with nearly 1.9 GW of capacity in the quarter, followed by battery storage with 1.2 GW, marking the second strongest quarterly performance ever for storage. Only two new wind projects with a total capacity of 356 megawatts were commissioned in the quarter.
There are 39 GW of installations under construction in the project pipeline and 93 GW in advanced development stages, the ACP said.
This also represents a slowdown as the pipeline grew by just 3 percent to 4 percent in the first and second quarters of 2022 compared to the 12 percent quarterly growth in 2021.
Texas projects account for almost a fifth the pipeline, with 23.8 GW of installations. California is second with 12.8 GW of projects in development.
Solar projects make up 59 percent of the pipeline. Land-based wind accounts for 17 percent the developing capacity and offshore wind another 13 percent. Battery storage the remaining 11 percent.
Activity in Power Purchase Agreements (PPAs), long-term contracts to purchase electricity from projects, also slowed in the third quarter as developers and purchasers announced 7.2 GW of new PPAs in the quarter, down 31 percent compared to the same period last year. For the year, new PPAs are only 3 percent down year-over-year thanks to a high announcement volume last quarter.
Utilities were the purchasers for about 25 percent of all PPAs announced this quarter, while commercial and industrial customers account for 43 percent of the agreements. State governments and undisclosed purchasers made up the remaining 32 percent of announced PPA capacity.