- Clean energy installations in the U.S. dipped 3% in 2021 compared to 2020 as policy issues held back the potential for new wind and solar installations, according to a market report released by the American Clean Power Association (ACP).
- According to the report, the renewable energy sector installed 27,723 MW of new utility-scale wind, solar and energy storage in 2021, including 12,747 MW of wind power and 12,364 MW of solar. Battery storage notched the first multi-GW year, with 2,599 MW brought online in 2021, up more than 1,500 MW from 2020.
- The slight decline in new renewable generation installation came amid a stalemate in Washington, D.C., over clean energy incentives that stalled in Democrats’ Build Back Better Act negotiations. A group of 70 clean energy CEOs sent a letter to the White House and Congressional leadership last week asking for "swift passage" of legislation that would expand the investment tax credit (ITC) to standalone energy storage projects.
The ACP Clean Power Quarterly report found that 10,520 MW of clean energy projects were installed in the fourth quarter of 2021 alone, including 5,409 MW of wind and 3,937 MW of solar. The report found that there are now over 1,000 clean energy projects under development totaling more than 120,000 MW.
Still, ACP says the current buildout represents only 45% of what is needed to achieve the Biden administration’s goal of a zero-emissions electricity grid by 2035. The slower pace of renewable installation – including the delay of more than 11.4 GW of projects that had been expected to come online in 2021 – in part reflects policy uncertainty around tax credits for wind and storage projects, according to the trade group.
"Although the U.S. has reached this incredible achievement, more needs to be done, at a faster pace, to reach the climate goals and targets our country needs to achieve. We urge Congress to take action to create a clean energy future that will help create more good-paying American jobs and combat the climate crisis," said ACP CEO Heather Zichal.
House Democrats passed a suite of energy-related tax credits totaling roughly $200 billion as part of the $1.9 trillion Build Back Better budget reconciliation package. That included an extension of the production tax credit for wind (set to expire at the end of this year), extended solar tax credits, incentives for electric vehicles and programs targeted at helping low-income households adopt renewable energy. The package stalled in the Senate amid opposition from Sen. Joe Manchin, D-W.Va., although Democrats have said they could work on a separate climate package.
Advocates have especially called for the ITC for standalone storage projects, an expansion of the credit that currently only applies to storage built with eligible solar generation. The lack of tax incentives has limited the availability of capital — especially for smaller companies – and has restricted the expansion of storage projects that can supplement a clean grid, according to the letter from clean energy CEOs.
"Energy storage technologies are pivotal to America’s grid resiliency, grid security and net-zero goals," reads the letter. "Certainty in the tax provisions allows our companies to continue to develop energy and climate solutions at scale and to build a diverse and reliable energy portfolio to support residential, commercial, and public sector entities."
A 2021 report from Wood Mackenzie found that the ITC for storage paired with solar had "supercharged" demand for front-of-the-meter deployments and said that expanding the credit for standalone storage would "provide upside" to forecasts. The Energy Information Administration wrote in August that the combined capacity of U.S. battery storage projects could grow by 10 times between 2021 and 2023 and could contribute 10,000 MW to the grid.
Jason Burwen, vice president of energy storage at ACP, said the 2021 installation results were "historic," marking the first multi-GW year for the booming industry. However, he added, the overall results that show the country is off pace for a 2035 decarbonization of the electricity sector indicates the need to "raise ambition" year over year instead of accepting the status quo.
"When you look at the magnitude of what addressing greenhouse gas emissions will require, we need long-term policies that ensure we do everything we can to meet our goals," Burwen said. "We know our companies can rise to the moment and meet these ambitions if Congress can also meet the moment."