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2023 renewable energy industry outlook

Growth unleashed amid headwinds

As the renewable energy industry heads into 2023, soaring demand and attractive, long-term incentives are creating strong tailwinds, but this momentum could be tempered by some of the same headwinds the sector encountered in 2022. Explore five trends that could help address these challenges and accelerate growth in the longer term.

The renewable energy industry is ready for takeoff

In 2022, US renewable energy growth slackened its pace due to rising costs and project delays driven by supply chain disruption, trade policy uncertainty, inflation, increasing interest rates and interconnection delays. Many of these challenges will likely carry over into 2023, creating strong headwinds. But growth will likely accelerate, powered by robust demand and the record-breaking raft of clean energy incentives in the Inflation Reduction Act (IRA).

Growing demand in 2023 could exacerbate supply chain constraints and interconnection bottlenecks, further boosting prices and extending project timelines. Also, transmission limitations could continue to hamper growth until capacity is significantly expanded. However, the evolving trends and opportunities that follow could help the industry navigate headwinds as it grows in 2023 and set the stage for faster growth in 2024.

Five renewable energy industry trends to watch

Rising clean energy component manufacturing could ease supply chain snags over time

US manufacturing doesn’t currently meet the renewable energy sector’s needs for clean energy components supported by secure and sustainable domestic supply chains. IRA incentives have already spurred new plant announcements and significant investment, and that’s likely to gain steam in 2023. While this may spell good news for renewable energy supply chains in the longer term, many see at least a couple more years of challenges.

New clean hydrogen economics could open avenues for renewable providers 

Long-sizzling interest in green hydrogen ignited with the IRA’s enactment in August 2022. The law’s $3 per kilogram tax credit for eligible “clean” hydrogen could make it price-competitive with higher carbon “gray” hydrogen in much of the country. While challenges such as lack of infrastructure still make hydrogen uneconomic for some uses, new IRA-driven economics could open avenues for renewable energy developers and producers to benefit in 2023.

IRA helps spur renewable providers to pursue opportunities in low-income communities

Until now, the clean energy transition has focused mainly on more affluent Americans, who have benefitted from incentives such as tax credits for rooftop solar or electric vehicles, while many low-income communities were left behind. But, outreach to low-income communities could accelerate in the coming year as federal policy with environmental justice provisions may further incentivise renewable developers to expand into these areas.

Renewable energy industry focuses on managing increasing cyber risk

One sign that the renewable energy industry is maturing is that it’s increasingly the target of cyberattacks. Cyber threats are expected to rise in 2023 and beyond as the clean energy transition progresses, focusing on both utility-scale and distributed renewable energy resources. Utilities and renewable developers are also expected to continue staffing up cybersecurity departments amid a growing gap in qualified cybersecurity talent.

Offshore wind industry addresses challenges to unlock rapid growth

By mid-2022, the US offshore wind project development pipeline had grown to more than 40 gigawatts (GW) of potential generating capacity across 12 states. Currently, just 42 megawatts (MW) of capacity is operational, about 1 GW is under construction, and almost 19 GW is in the permitting phase. A further 20 GW is in the siting and planning phases and will likely take many more years to develop. So, the next few years could be critical for addressing challenges to unlock that growth.

 

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