2023 renewable energy industry outlook Contents Renewable energy growth set for takeoff amid supply and interconnection turbulence 3 Trends to watch 1. Domestic manufacturing Rising clean energy component manufacturing could ease supply chain snags over time 4 2. Decarbonized fuel New clean hydrogen economics could open avenues for renewable providers 5 3. Energy equity IRA helps spur renewable providers to pursue opportunities in low-income communities 6 4. Cybersecurity Renewable energy industry focuses on managing increasing cyber risk 7 5. Offshore wind Offshore wind industry addresses challenges to unlock rapid growth 8 Growth unleashed within limits Let’s talk 9 10 2023 renewable energy industry outlook 2 Renewable energy growth set for takeoff amid supply and interconnection turbulence In 2022, US renewable energy growth slackened its pace due to rising costs and project delays driven by supply chain disruption, trade policy uncertainty, inflation, increasing interest rates, and interconnection delays.1 Many of these challenges will likely carry over into 2023, creating strong headwinds. But growth will likely accelerate powered by robust demand and the record-breaking raft of clean energy incentives in the Inflation Reduction Act (IRA). The United States added 5.7 gigawatts (GW) of utility-scale solar generation capacity and 7.5 GW of wind capacity in the first eight months of 2022, down 26% and 8%, respectively, from January to August 2021.2 Nevertheless, wind and solar accounted for nearly 70% of capacity added, and renewable energy’s share of US electricity generation rose to 23% from 21% during the same period.3 Moving into 2023, drivers for renewable growth are some of the strongest the industry has seen, including competitive costs, supportive policies, and burgeoning demand: • • Cost competitiveness. While renewable energy costs may continue to rise temporarily in 2023 due to ongoing supply chain challenges, wind and solar will likely remain the cheapest energy sources in most areas, as fuel costs for conventional generation have been rising faster than renewable costs.4 Federal clean energy policies. Among other supportive provisions, the IRA extends wind and solar tax credits for projects that begin construction before 2025 and technology-neutral credits through at least 2032.5 Projections suggest the law will spur 525 to 550 GW of new US utility-scale clean power by 2030.6 • State clean energy policies. Twenty-two states and the District of Columbia are targeting 100% renewable energy or 100% carbon-free electricity, often through clean and renewable energy mandates and incentives, with target dates between 2040 and 2050.7 • Utility decarbonization. As of October 2022, 43 of the 45 largest US investor-owned utilities have committed to reducing their carbon emissions, and boosting renewables is one of their key strategies for meeting those commitments.8 • Corporate renewable procurement spurred a record 11 GW of US clean energy installations in 2021 and is set to exceed that in 2022.9 More than 380 global businesses have committed to 100% clean electricity by joining the RE100 renewable electricity initiative, up from about 200 in 2019.10 • Residential solar demand is growing faster than ever, up 35% in H1 2022 year over year, as households react to rising retail electricity prices and weather-driven power outages.11 • Private investment in renewables hit a record high of $10 billion in the past year.12 That could continue, as investors are attracted by transparent returns on mature technologies backed by 10-year tax credits with direct pay options. Growing demand in 2023 could exacerbate supply chain constraints and interconnection bottlenecks, further boosting prices and extending project timelines. And transmission limitations could continue to hamper growth until capacity is significantly expanded. But the evolving trends and opportunities that follow could help the industry navigate headwinds as it grows in 2023 and set the stage for faster growth in 2024. 2023 renewable energy industry outlook 3 1 Domestic manufacturing Rising clean energy component manufacturing could ease supply chain snags over time US manufacturing does not currently meet the renewable energy sector’s needs for clean energy components supported by secure and sustainable domestic supply chains.13 But IRA incentives have already spurred new plant announcements and si