Key industry insights from ACP CLEANPOWER Conference

I can see how the renewable energy industry has transmuted from developers working in their own separate niches to one where all technologies have a place at the table together.

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The renewable energy business is expanding and evolving—new players are coming in, new technologies are emerging, and, thanks to federal and state efforts, more and more people have access to clean energy. I just returned from the ACP CLEANPOWER conference where my colleagues and I had the opportunity to meet with the most active players in the industry. In some ways the week felt like part two of last year’s conference—the same themes and trends were on the agenda and part of the conversation. But this time, they all seemed bigger and more important. Here are a few of the insights I observed during the week.

The outlook for the U.S. market

2023 was a record year for renewable energy in the United States (U.S.), and 2024 is already off to a strong start. This momentum is bolstered by a resurgence in domestic manufacturing, with over 500 new facilities contributing to the supply chain.

The forecast for the next seven years is robust, with an expected 386 GW of new capacity. Both wind and solar are set to experience growth, but solar will be the big story, driving the expansion of clean energy across the U.S. In 2024, solar will eclipse wind in terms of GW installed, and this trend is expected to continue, with solar taking the lead and projected to outshine all other sources by 2040.

Wind energy is beginning to recover from the contraction experienced prior to the Inflation Reduction Act (IRA). The sector is shifting its focus to regions without transmission constraints. Unlike solar, wind faces regional constraints, particularly in areas like California and Texas, as well as ongoing issues with permitting and supply chains. There is potential for more mega projects similar to SunZia.

Offshore wind will grow steadily, although substantial expansion may not occur until the 2030s. The Northeast, with its favorable power prices, dense populations, and high load demand, is likely to see the most growth (particularly floating offshore wind in the Gulf of Maine).

Uncertainty around battery storage deployment persists, as it remains regionally concentrated in California and Texas. However, the growth of Battery Energy Storage Systems (BESS) is anticipated to continue, playing a crucial role in ensuring grid reliability and resilience. The distributed generation (DG) solar market is expected to expand, further leading to increased battery deployment.

Looking further ahead, the industry faces several challenges:

• NERC project capacity retirements: Higher retirements are expected by 2033
• Transmission: Transmission remains a significant challenge. The industry is awaiting improvements in this area to unlock further growth. Capex is rising due to limited transmission capacity, but there is some relief as the interconnection queue is easing, with PJM clearing 40 GW of projects
• Extreme weather events: These events are becoming more frequent, leading to contractual risks and increasing the need for grid operators to adopt merchant thinking
• Demand growth: Increased demand is significantly disrupting the industry, leading to higher dependence on natural gas. While there is resistance to gas, a resurgence cannot be ruled out. However, the rise of electric vehicle (EV) load is making a positive difference.

Overall, the U.S. renewable energy market is on a strong growth trajectory, with solar leading the way and significant developments expected in wind and battery storage. The continued success of these technologies will heavily depend on securing offtake agreements and maintaining a robust supply chain, alongside addressing transmission challenges and adapting to the impacts of extreme weather events.

Reliability

Concerns about reliability came up in many conversations for a variety of technologies. The CLEANPOWER conference is still very wind-focused, and blades came up repeatedly in discussions and sessions. Concerns about blade reliability, especially as they become larger, could have a dampening effect on the wind industry as it grows. However, the reluctance financiers and developers are feeling about larger blades will lessen as their market penetration increases and the manufacturing process and supply chain smooths out.

But blades weren’t the only area where reliability was an issue. Storage, specifically BESS were also a topic of conversation. Interestingly, storage manufacturers dominated the exhibit floor space, much like wind manufacturers did a decade ago. The storage market tripled in 2023, and given the amount of renewables that will be added to the grid, the need for energy storage to aid in reliability and resilience will only increase.

In the same vein, energy assessments for solar, especially large, distributed generation projects, have been inconsistent and leading to some underperformance. Notably, this topic came up several times at a conference whose roots are very much in the wind industry. Fortunately, the industry has tools, like DNV’s Solar Farmer, that are continually improving their methodology and providing increasingly accurate energy assessments.

Bankrolling the energy transition with the Department of Energy

The renewable energy industry is humming along, but to achieve net zero by 2050 more than 1 TW of installed capacity is needed—and this is not going to happen without some market intervention. The Department of Energy (DOE) is offering a number of funding programs, supported by the IRA, that aims to position the U.S. as the global leader in developing and deploying clean energy technologies. These programs will support all aspects of development for clean energy—from research and development through deployment. The reach is fairly broad; it is intended to support manufacturers optimize their processes, fund research for new or improved technologies, and help developers by supporting infrastructure construction.

The final takeaways

In my position at DNV, I have the opportunity to talk to many different people in the industry and see how trends, opportunities, and challenges are developing through a broader lens. Likewise, my colleagues at DNV have similar experiences, though more often focused on a specific technology or practice.

These insights, along with DNV’s rich 160 year history, allow us to apply our unique knowledge and expertise to help our customers succeed in the energy transition.

Looking back at this year’s CLEANPOWER conference, and all the events that preceded it, I can see how the renewable energy industry has transmuted from developers working in their own separate niches to one where all technologies have a place at the table together and, increasingly, in the renewable energy projects operating or in development across the U.S. I look forward to seeing how it all unfolds.