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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 sector is ready to branch out

In 2021, the renewable energy industry remained remarkably resilient. Rapid technology improvements and decreasing costs of renewable energy resources, along with the increased competitiveness of battery storage, have made renewables one of the most competitive energy sources in many areas. Despite suffering from supply chain constraints, increased shipping costs, and rising prices for key commodities, capacity installations remained at an all-time high. Wind and solar capacity additions of 13.8 GW in the first eight months of 2021 were up 28% over the same period in 2020. Many cities, states, and utilities set ambitious clean energy goals, increasing renewable portfolio standards and enacting energy storage procurement mandates.

Renewable energy growth is poised to accelerate in 2022, as concern for climate change and support for environmental, social, and governance (ESG) considerations grow and demand for cleaner energy sources from most market segments accelerates. At the same time, the Biden administration’s vision to fully decarbonise the US economy is helping spur activity in the renewable sector that will likely drive further growth—particularly if proposed legislation is enacted. In our renewable energy industry analysis, the following five trends are expected to move to the forefront in 2022, opening new avenues in the renewable energy growth story.

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.

Renewable energy industry focuses on managing increasing cyber risk

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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