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US energy, auto industries’ quarterly activity show dynamic shift to renewables
Installations of renewable energy and sales of electric vehicles (EVs) set records in the US in recent quarters, as the economy rebounded from COVID-19 and the energy transition continued to gain steam.
The American Clean Power Association (ACP) said the US installed 3,336 MW of new wind, solar, and storage capacity during the third quarter of 2021, with additions totaling 15,317 MW in the first three quarters, a 23% increase compared with 2020.
"Clean power is affordable, and the market is responding. Our report shows customer demand remains high and growing for clean power," Heather Zichal, ACP CEO, said. "We are seeing a clean energy future develop here in the United States. Multiple technologies working together promise to provide more efficient, cleaner, and more reliable energy for all Americans."
There is now 186,674 MW of operational clean power capacity in the US, ACP said. At the start of 2020, less than 140,000 MW of capacity was installed.
Project owners commissioned a total of 49 new utility-scale projects across 20 states during the third quarter of 2021, representing investments of about $23 billion, ACP said. Breaking it down by category, the trade association identified:
- 7 wind projects
- 34 solar projects
- 8 energy storage projects
The number of clean power projects under construction and under development continues to grow significantly. At the end of September, the near-term development pipeline consisted of over 900 projects totaling 109,596 MW of capacity, including 38,122 MW under construction and 71,474 MW in "advanced development," according to ACP.
The project pipeline is 28% larger than at the end of the first quarter of 2021 and 7% higher than at the close of the second quarter of 2021.
Solar represents the largest share of capacity in the clean power pipeline, accounting for 54%, followed by land-based wind at 23%, offshore wind at 13%, and battery storage at 9%.
Also on the rise are hybrid systems that combine renewables and energy storage. ACP said 2,443 MW of solar-plus-storage was added to the grid in the past quarter, bringing the on-the-grid total to 3,574 MW, with another 1,931 MW partially online and 21,185 MW in the pipeline. For wind-plus-storage, 1,892 MW is online. (Hybrid projects are considered partially online if one technology is online, and the other is still under construction or in advanced development.)
Power purchase agreements (PPAs) involving utilities and corporate buyers are driving much of the growth. Renewables developers announced 9,054 MW of new PPAs in the third quarter. Overall, a total of 17,442 MW of PPAs have been announced in 2021, a 16% increase compared with the same period in 2020.
Corporate customers accounted for 1,761 MW of those PPAs, and their contracts nationwide now top 37,000 MW of clean power, ACP said. The top five corporate buyers of clean power in the quarter were Amazon (509 MW), Facebook (450 MW), Microsoft (430 MW), Mitsui & Co. (159 MW), and Dupont (135 MW).
In Texas, corporate PPAs are especially important, as IHS Markit noted that one-quarter of the solar projects expected to come online in 2022-23 in that state, nearly 16,000 MW, are backed by corporate PPAs.
Looking ahead, the US Energy Information Administration (EIA) sees the growth continuing.
In its most recent "Short Term Energy Outlook," EIA forecasts that 17,100 MW of new wind capacity will come online in 2021 and 6,500 MW in 2022. Utility-scale solar capacity will increase by 16,000 MW in 2021, and 18,000 MW in 2022.
EIA also sees a growing market for distributed, small-scale solar systems (1 MW or less), with 4,500 MW of installations seen in 2020, rising to 5,800 MW in 2021, and 7,800 MW in 2022.
Looking longer term, EIA's "Energy Outlook 2021" forecasts that 579,000 MW of new wind and solar capacity will be installed in the US by 2050. For comparison, gas-fired power capacity is expected to increase by less than 320,000 MW over the next three decades.
In a recent analysis, IHS Markit observed that solar installations in 2022 and 2023 are somewhat hard to predict because of supply chain issues and shifting federal regulations and policies.
"Solar PV installations were expected to peak in 2022 because developers had to satisfy the 2023 in-service deadline to capture the Investment Tax Credit (ITC)," wrote Eric Wright and Alex Kaplan, senior research analysts. "However, the US [Internal Revenue Service] issued Notice 2021-41, which extended the ITC safe harbor period from four to six years for solar PV projects that began construction between 2016 and 2020, [which] removes the urgency to install in 2022."
At the moment, solar developers are facing supply-chain challenges, such as inflated freight costs, difficulty obtaining some modules, and higher costs for modules due to an increase in the cost of components. All of these factors could put a damper on 2022 activity.
Adding to the supply chain challenges is the Biden administration's import and export restrictions on producers of polysilicon products in the Xinjiang region of China that began on 24 June, based on what it called "compelling evidence" they are using forced labor involving the region's ethnic Uyghur population.
The US banned imports of goods or materials produced or derived from silica-based products made by Hoshine, a manufacturer of polysilicon used to produce solar panels. And it said that importers of products made by six other companies (if made in Xinjiang Province) must get approval from the US Department of Commerce before the product is shipped.
EV sales at record levels
The US electric vehicle (EV) industry lately is showing an even greater rate of growth than the renewable power industry.
According to data from IHS Markit and from the Industry Alliance for Automotive Innovation (AAI), EV sales in the second quarter of 2021 surged to new records and obliterated the mark of the same quarter a year ago.
IHS Markit's tally for Q2 new EV sales (EVs, fuel cell EVs, hybrid EVs, and plug-in hybrids) in the US was 170,085 units. This is up nearly 33% from the first three months of the year.
And the year-over-year quarterly comparison is even more startling: the gain is more than 250% from the second quarter 2020's figure of 47,293 units.
Tesla is driving a lot of this growth, IHS Markit Associate Director Loyalty Solutions and Industry Analysis, Automotive Thomas Libby said in a note to Net-Zero Business Daily on 27 October. "The CEO has created a brand image that goes way beyond the products," Libby wrote. "He is perceived of as a winner, both inside and outside the auto industry."
Tesla's announcement on 25 October that car rental agency Hertz has agreed to purchase 100,000 of its vehicles over the next 12-15 months is the latest coup for the automaker. For context, Tesla built nearly 510,000 cars in 2020, and its pace is nearly double that this year, with Q3 production at 283,000 vehicles.
The Hertz deal, valued at about $4.2 billion, boosted the company's stock up by nearly $83 billion and its market capitalization to more than $1 trillion.
But the EV industry's recent growth is about more than Tesla, Libby continued, pointing to the Mach-E, an electric Ford Mustang, and the Taycan by Porsche as popular cars introduced in the last year.
With new models coming rapidly, Libby said companies are offering incentives to keep EV monthly lease payments close to those of internal combustion engine vehicles, another positive factor.
Data from AAI reinforce IHS Markit's sales update. In its first-ever "Get Connected Electric Vehicle Quarterly Report," released on 12 October, the trade group reported "strong momentum in the EV market … ZEVs [zero-emission vehicles] represented 3.8% of overall new vehicle sales, the highest for any quarter to date. Year-to-date, ZEV sales averaged 3.5% of the larger light-duty automotive marketplace."
Moreover, in June 2021 (most recent data available), EVs were a record 4.74% of the new sales market.
Crossover utility ZEVs have overtaken passenger cars, AAI said. "Monthly sales of battery and plug-in hybrid crossover utility vehicles have grown from less than 16% of the ZEV market at the start of 2020 to 50% in the second quarter of 2021," it said.
AAI said that 59 models of EVs have been sold in 2021, and automakers have announced plans to introduce about 130 more EV models by 2026. At this point, vehicle availability is becoming secondary to the charging infrastructure to support those cars. "Nearly one-third of all charging infrastructure and the only network of hydrogen fueling is located in California, which supports the 41% of all registered ZEVs in the US," it said.
Using data from the US Department of Energy, the trade group said 39,779 locations have Tier 2 chargers with a total of 87,802 charging outlets. Fast chargers can be found at 5,409 locations, representing 19,841 outlets.
Aware of the situation, the Biden administration has pledged to install at least 500,000 charging ports over the next five years, focusing especially on the interstate highway system. However, funding for that program has not been finalized.
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