During a period that saw the U.S. pass its first policy to meaningfully address climate change, the clean energy industry recorded its slowest quarter in three years.
The American Clean Power Association's analysis of the third quarter of 2022 magnifies the numerous headwinds that were plaguing the industry. It also showcases that the Inflation Reduction Act couldn't have come at a better time.
Supply chain disruptions, trade disputes, and tax policy uncertainty contributed to wind installations falling 78% in Q3, while solar installations dropped 23%. Project delays totaled 14 GW of capacity from July to Sept., adding to a growing backlog that now totals 36 GW.
And while there's plenty of reason to be optimistic about the impact of the Inflation Reduction Act over the next decade, the historic law doesn't solve all of the industry's problems.
JC Sandberg, ACP's interim CEO, said the U.S. Customs and Border Protection detention of solar modules tied to forced labor in China has been an "opaque and slow-moving process" that has led to repeated project delays.
Gia Clark, LevelTen Energy's senior director of developer services, joined the Factor This! podcast to discuss the Inflation Reduction Act's impact on PPA and asset marketplaces.
LevelTen's Q3 PPA Price Index covers PPA offers from July to September. So, while the Inflation Reduction Act was signed into law on Aug. 16, PPA prices have not yet meaningfully responded to it, at least as reflected in the tracking data. Read more here.
Credible evidence has circulated since 2020 that ethnic Uyghurs living in the Xinjiang region of China are being forced to work in extracting and refining raw materials that go into the production of polysilicon which then is used to produce solar cells and modules.
Customs officials targeted 838 entries valued at more than $266.5 million in August alone.
ACP said the industry is committed to procuring modules that have no links to forced labor. They added that they're working with the Biden Administration to get clear guidance on how to move imported modules through the process.
ACP was not able to provide a figure as to how much capacity is tied up at the border.
Battery storage was a bright spot for the industry in Q3.
Developers commissioned 1.2 GW of capacity last quarter. Battery storage is on pace to notch its best year ever, with 2022 installations already equaling 2021 installations with a quarter to go.
Sandberg expects even more success once the Inflation Reduction Act begins to impact the market.
“ACP anticipates that the IRA will give industry the tools it needs to more than triple annual installations of wind, solar, and battery storage by the end of the decade," he said. "We continue to work with relevant government decision-makers to quickly resolve remaining tax guidance, supply chain, and trade challenges to realize the IRA’s full potential. This is essential to set the nation on a path to achieve its clean energy goals."