2022 renewable energy industry outlook
The year ahead promises new growth paths for the renewable energy industry.
2022 renewable energy industry outlook
The year ahead promises new growth paths for the renewable energy industry. This could be helped by supportive policies from an administration that is focused on combatting climate change. However, some challenges still linger. Explore how new technologies, business models, policies, and investments could help address these challenges and accelerate growth in our 2022 renewable energy industry outlook.
The renewable energy sector is ready to branch out
In 2021, the renewable energy industry was doing well. Many advances in technology and decreasing costs of renewable resources made renewables one of the most competitive energy sources in many areas. However, the industry faced some problems like supply chain constraints, increased shipping costs, and rising prices for key commodities. Despite all this, the industry still installed a lot of new capacity. In fact, wind and solar capacity additions were up 28% over the same period in 2020. A lot of cities, states, and utilities were also setting ambitious clean energy goals.
The renewable energy industry is going to grow a lot in 2022. This is because people are getting more and more concerned about climate change, and they want energy that doesn't hurt the environment. The Biden administration also wants to get rid of all the carbon emissions, which will help the renewable energy industry grow even more. There are five trends that we predict will be really important in 2022.
Five renewable energy industry trends to watch
#1. Growing interest in next-generation clean energy technologies
People are investing in new technologies. Renewable energy industry people are thinking about investing in new technologies. This will help with renewable energy, like wind and solar. These technologies have been around for a while, but now there is money to help make them better.
These technologies can provide clean electricity without greenhouse gas emissions and also help store energy for later use, easing grid congestion, stemming renewable curtailment, boosting reliability, and facilitating integration of solar and wind into the grid.
The decreasing costs of renewable energy have been a major driving force behind the rise of green hydrogen. In 2022, as renewable energy penetration on the grid increases, green hydrogen production is also expected to grow. This is because green hydrogen has the potential to act as long-duration and seasonal storage of fuel that is available on demand to generate power. States and energy companies are also responding to this opportunity and ramping up renewable hydrogen production. There is also high interest in a host of evolving mechanical and battery storage technologies that offer long-duration energy storage options and support the grid.
#2. Solar champions new configurations
Solar photovoltaic (PV) systems are becoming more and more affordable. They are becoming a very competitive resource compared to other options. This is likely to lead to the solar industry exploring new ways of doing things. In 2022, there could be a lot more solar-plus-storage buildouts, floating solar PV modules, and community solar projects. Adding storage to solar power offers cost savings, operational efficiencies, and the chance to use the solar investment tax credit for both technologies.
Community solar projects are becoming more popular. This is happening because more states are passing laws that allow these types of projects. Community solar projects let people without their own roof space or who don't have good credit buy into a project. This way, they can still get the benefits of solar power.
And finally, although a new technology, floating solar photovoltaics (FSPV) is gaining attention in the United States. Some developers are exploring these projects either separately or as hybrids with hydro. This could be beneficial because it would share a substation and transmission.
#3. Transmission infrastructure is becoming a key priority, especially for offshore wind
The development of transmission lines, which are necessary to connect new, often remotely located renewable energy sources to where people consume electricity, is expected to be a key focus for the renewable energy industry in 2022. Policy and regulatory support, investments, and innovation will likely help unlock progress in this area, which has often been stymied by siting and permitting delays.
Transmission projects, especially large ones that cross state borders, have been a major challenge for renewable growth. This is because they face difficulty in gaining regulatory approval from every state they cross, as well as refusal from landowners, and opposition from environmental groups.
Almost 900 GW of planned renewable energy or energy storage projects are waiting in line to be connected to the power grid. This is especially true for offshore wind, which is poised for significant growth and needs to be connected to coastal infrastructure. Both increasing the capacity of existing lines and building new lines could be key in solving the transmission challenge. In fact, 76% of the power and utility respondents to a recent Deloitte survey are planning or depending on new transmission projects to increase renewable energy access.
#4. Supply chain strategies continue to evolve
The renewable energy industry is continuing to change. This is because the industry has been having some problems recently. These problems are due to the cost of logistics and the US-China trade tensions. In 2021, the solar industry had some price increases for the first time in seven years. This was due to a shortage of components, raw materials, and labor. It also became more expensive to ship things. In 2022, US renewable energy developers will likely look for new suppliers. They will also try to find ways to reduce the cost pressures they are facing.
There is a good chance that in the coming year, many solar installers and developers will increase their compliance monitoring activity. They are trying to follow the Solar Energy Industries Association's Solar Supply Chain Traceability Protocol. This set of guidelines is meant to trace the origin of solar materials, in order to prove that their procurement is free of unethical labor practices. In the wind sector, the United States has increased domestic turbine component production with more than 500 manufacturing facilities in 40 states.
However, the industry still depends on offshore manufacturers for many components. To further boost domestic production, advanced energy manufacturing tax credits are included in legislation that Congress is considering.
#5. The circular economy is critical to sustainable growth in the renewable energy industry
In 2022, people will start to pay attention to how to get rid of things when they stop working. This is important for renewable energy products and materials, because they only have a certain life span. If we do this right, it will help reduce waste, increase security of resources, and provide other benefits too. As solar, wind, and battery installations increase, the amount of waste generated by these things will go up too. We need to find solutions soon. By 2030 there could be 1 million tons of solar panels that need to be recycled and 80 metric kilotons of lithium-ion batteries in the United States alone.
People in the industry, regulators, and policymakers are looking for ways to make products last longer and work better. They want to create a circular economy for batteries. This means that different businesses will work together and with the government to use batteries in different ways. A market for recycled electric vehicle batteries is growing. But there are still some regulations that need to be worked out and incentives that need to be put in place before it becomes really popular.
