Charts: US clean energy developers are hyped about post-IRA prospects

Canary Media’s chart of the week translates crucial data about the clean energy transition into a visual format.

When it comes to gauging the health of the renewable energy industry, project developers and investors are the (forgive us) canaries in the economic coal mine — early indicators of every perturbation in the market. It turns out that these canaries are verging on wildly optimistic about the future of solar, wind and energy storage in the U.S. over the next few years.

According to the latest annual survey conducted by the American Council on Renewable Energy, major developers and investors unanimously expect the U.S. to become more attractive for renewable energy investment in the next four years compared to other countries. And almost all of them are planning to increase their investments and activity in renewable energy.

This is the impact of the long-term policy certainty created by the Biden administration and Congress. It’s the clean energy incentives in the one-year-old Inflation Reduction Act that are driving the continued growth of wind, solar and storage as well as the creation of new markets such as green hydrogen.

According to the survey respondents, the renewable energy provisions in the IRA have already accelerated deal flow and demand for financing, particularly tax equity. Investors note that their investment choices in 2023 are being shaped by the long-term tax-credit extensions, solar and storage tax credits, direct pay and transferability.

In a repeat from last year’s survey, investors collectively ranked utility-scale solar, energy storage and commercial solar as the three most attractive clean-energy sectors for investment from 2023 to 2026. Clean hydrogen and geothermal didn’t fare as well in the ranking, coming in at Nos. 7 and 8, respectively.

Despite enthusiasm over the IRA, survey respondents expressed concerns that the rate of power-sector decarbonization could be slowed by supply-chain disruptions (particularly in the solar sector), trade restrictions (namely, potential future actions against Chinese or Southeast Asian products such as inverters and integrated circuits), interconnection queues and lack of transmission capacity.

Still, the overall news is good. Developing, engineering and financing a renewable energy project is a complex economic and logistical ballet — and if the investors and builders are indicating maximum optimism, then the dance is likely to be well-choreographed and graceful.