News

A Recap of Renewable Energy News in 2022


It is hard to find a bigger 2022 renewable energy milestone than passage of the Inflation Reduction Act (IRA). Its $389 billion clean energy investment is the largest in U.S. history. Greenhouse gas emissions will be reduced 44 percent from 2005 levels by 2030 through greater clean energy deployment, and for the first time, the IRA extends and makes the investment tax credit (ITC) available to all clean energy technologies. The Internal Revenue Service (IRS) has released six notices for public comment to inform guidance and rulemaking. The final tax guidance is expected to be released in early 2023.

Another big federal milestone this year occurred when President Biden announced a two-year pause on tariffs for manufactured solar modules from Cambodia, Malaysia, Thailand, and Vietnam and took actions to bolster domestic solar production.

Renewable Energy Growth Continues

The U.S. has seen a steady rise in energy prices brought about by the Russia-Ukraine war. Russian energy has also impacted U.S. supply chains that rely on Russian fuel to produce goods for the U.S. market. Despite these obstacles, renewables are expected to comprise 22 percent of the U.S. electricity generation in 2022. In fact, renewables are the fastest-growing electricity generation source in the United States, and will reach almost one quarter of U.S. electricity generation in 2023.

Supply Chain Constraints & Interconnection Queue Concerns

The renewable energy industry would have seen greater deployment if not for supply chain constraints and long interconnection queues. 

Supply Chain Constraints

Supply chain delays have ranged from containers stuck in ports to forced-labor allegations in China’s Xinjiang Uyghur Autonomous Region. Chinese companies still control all steps in the solar supply production: the polysilicon, production of wafers, solar cells, and solar panels. Other countries have not built up capacity to decrease disruptions. Critical components are also in short supply; for example, orders for new power transformers are on a minimum one-year delivery lag

The demand for lithium-ion batteries has resulted in some cross-sector competition by the electric vehicle sector. Even if an energy storage developer can afford battery prices, automotive OEMs can sign contracts for higher volumes and crowd them out. Almost all battery manufacturing capacity announced is for the automotive sector and all the grid batteries are already under contract.  

Interconnection Delays

The data from FERC in the figure below shows the staggering interconnection delays. For solar projects that begin operation, the time to conduct a full interconnection study increased from 2.1 years in 2010 to 3.7 years in 2021. Approximately 73 percent of projects currently in the queue requested to come online before 2025. Among those projects, only 13 percent have executed an interconnection agreement.

On June 16, 2022, FERC issued a Notice of Proposed Rulemaking (NOPR) entitled ‘Improvements to Generator Interconnection Procedures and Agreements.’ The NOPR will implement a first-ready, first-served cluster study process designed to speed interconnection time. The NOPR, though, is silent on cost allocation of network upgrades, a topic which will become more critical as renewable resources come online. Reply comments were extended to mid-December 2022.

PJM Interconnection is also overhauling its interconnection study process. Like the FERC NOPR, the PJM Proposal will increase current generator site control requirements and impose penalties on interconnection applicants that do not comply with readiness requirements. 

Traction on both significant actions should net changes in 2023.

Impacts of Climate Change and Grid & Transmission Investments

This year, the U.S. saw the impact of climate change on the grid like never before. Extreme heatdroughtswildfires, and hurricanes are all overtaxing America’s outdated power grid. Florida was slammed with one of the largest storms to ever make U.S. landfall, Hurricane Ian. Wildfires burn year-round in California and have grown more severe and frequent as temperatures rise and the state experiences more persistent drought. Texas experienced extreme heat this year, and even earlier in the summer than in years past. The state set new records for electricity demand in the second week of June.

In a May 2022 report, North American Electric Reliability Corporation (NERC), a regulating authority that monitors the nation’s electrical infrastructure, warned that extreme temperatures and ongoing drought will continue to strain the U.S. power grid. Even though renewables plus storage are key to strengthening America’s power system, the U.S. will not have enough transmission to do so. In August 2022, the Department of Energy (DOE) created a Grid Deployment Office tasked with funneling billions into transmission lines and distribution grid networks.

In November, the 27th Conference of Parties (COP27) to the United Nations Framework Convention on Climate Change (UNFCCC) took place in Egypt. (See our 2021 piece here for more information about the UNFCCC and previous COPs). The big climate news from COP27 is that parties agreed to create a loss and damage fund. This historic deal will provide long-needed funding to alleviate climate impacts on poor and vulnerable countries. Despite this win, many were frustrated by a lack of updated country-based climate targets and dearth of discourse around reducing fossil fuel usage. Though some countries pledged more stringent emissions reduction and signed agreements for renewable power development, we still must do more to mitigate climate change and minimize global temperature rise.

Clean Energy Technology Trends

In the face of mounting challenges from supply chain issues and interconnection delays, 2022 was notable for making uneconomic clean energy technologies cost-competition for the first time thanks to passage of the Inflation Reduction Act. The first is green hydrogen, a fuel produced through electrolysis of water using renewable energy rather than fossil fuels. Green hydrogen will decarbonize multiple sectors but its use has been hampered by economics and policy drivers that determine how benefits are compensated. The Inflation Reduction Act, however, upended hydrogen economics by suddenly making green hydrogen cost-competitive with its natural gas counterpart. The U.S. Department of Energy has committed to making significant investments in green hydrogen and 2023 should be a turning point.  

Carbon Capture and Storage, also known as CCS, is the process of either seizing carbon dioxide before it enters the atmosphere or pulling it out of the atmosphere, then transporting it into a storage location and isolating it. It has not been commercially deployed to date. However, the passage of the IRA means that for the first time carbon capture, removal, use and storage technologies are within reach for industries with difficulties reducing emissions, like steel, cement, refineries, and chemicals. This is important since these sectors account for over a third of emissions in the United States.

There has been a lot written about the future in long duration energy storage (LDES). LDES will help the United States achieve a net-zero carbon grid by dispatching low carbon power, when needed, and accelerating the retirement of gas peaker plants. LDES encompasses a group of conventional and new technologies that vary, depending on level of maturity and commercialization potential. There has recently been an influx of private investment in the LDES sector. A few of these include announcements by FlexGen Power Systems, EnerVenue, Malta, and Form Energy. While there is no clear LDES favorite yet, a leading LDES technology must demonstrate more than just a marginal benefit over li-ion. 2023 may be the year for long duration energy storage to find a clear winner.

The year 2022 has seen delays in clean energy deployment but changing economics made possible by passage of the Inflation Reduction Act should make 2023 a year to watch.