Since 2022, renewable energy growth in the United States has been impacted by rising costs, supply chain disruption, inflation, and increasing interest rates. Many of these challenges have continued throughout 2023, but growth in the renewable energy industry has begun to increase from Inflation Reduction Act (IRA)[1] funding. Expected 2023 energy trends include a focus on domestic manufacturing, the continuation of fuel decarbonization, increased cybersecurity, and investment in offshore wind. Overall, key drivers for renewable energy growth are the renewable policy standard and clean energy standard.
Domestic Manufacturing
In February 2022, the United States Department of Energy (DOE) published America’s Strategy to Secure the Supply Chain for a Robust Clean Energy Transition[2]. The report presented comprehensive strategies to bolster the United States economy and domestic manufacturing, and included DOE recommendations to improve domestic manufacturing. Amongst other requirements, companies must increase raw material availability and augment supply chain knowledge.
Decarbonization Fuels
According to a report by the Resources for the Future[3], hydrogen, bioenergy, and building electrification play a substantial role in decarbonization. Provisions within the Inflation Reduction Act aim to support these domains through incentivized programs. For hydrogen, the new clean hydrogen tax credit helps advance the production of hydrogen fuel cells. For bio-based energy, the clean electricity credit directly funds biofuel-based companies. In building electrification and energy efficiency improvements there are rebates for heat pumps, water heaters, and whole home energy retrofitting technologies. Overall, the decarbonization of fuels represents an avenue for expected continued growth throughout 2023.
Cybersecurity
Reliable energy delivery requires cyber-resilient energy delivery systems. The Cybersecurity and Infrastructure Security Agency created a National Infrastructure Protection Plan[4] to outline the correct implementation of a risk management framework. Over the past few years, there has been a rise in supply chain attacks, and it now represents a significant problem in the energy sector. Once attackers have access to a company’s innerworkings, they can steal sensitive data or even cause physical damage. Policymakers are aware of this heightened threat and the importance of a secure energy network. Recently, the House passed the Energy Cybersecurity University Leadership Program Act[5], a bill focused on protecting energy infrastructure and the privacy of all.
Offshore Wind
Currently, the United States has two operational offshore wind farms[6], in Rhode Island and Virginia, with a capacity of 42 megawatts. Projections for the end of the year include U.S. Vineyard Wind 1, located off Massachusetts, with 800-megawatt capacity; and South Fork Wind will be located off New York with 132-megawatt capacity. As noted in the 2023 Offshore Wind Market Report[7], “offshore wind project development, construction and operations are expected to support up to 83,000 American jobs by 2030, with industry investment set up to deliver $25 billion per year in economic output.”
Renewable Policy Standard and Clean Energy Standard Legislation in 2022 and Q1 2023
Since January 2022, legislators have created bills that make technical changes to existing renewable energy programs. More specifically, Connecticut, Minnesota, and Rhode Island have been key states in driving the clean energy standard forward. In Connecticut[8], the new clean energy standard targets are 100% zero carbon electricity by 2040. In Minnesota[9], new revisions established 100% clean energy by 2040 and increased the renewable policy standard to 55% by 2035. In Rhode Island[10], the renewable policy standard is now set at 100% by 2033.
Overall, renewable energy continues to significantly reduce the emissions of greenhouse gases. Going forward, as the United States continues to enact legislation focused on obtaining goals set forth in both the renewable policy standard and clean energy standard, the energy market may expect more stable energy prices and greater energy equity.
[1] Building a Clean Energy Economy: A Guidebook to the Inflation Reduction Act’s Investments in Clean Energy and Climate Action, (The White House Washington, 2023).
[2] America’s Strategy to Secure the Supply Chain for a Robust Clean Energy Transition, (The White House Washington, 2022).
[3] Global Energy Outlook 2023: Sowing the Seeds of an Energy Transition, (The White House Washington., 2023).
[4] 2013 National Infrastructure Protection Plan, (The White House Washington, 2023).
[5] House passes cyber bill aimed to protect energy sectors, (Nexstar Media Inc, 2022).
[6] Offshore Wind, (MH Sub 1, LLC, 2023).
[7] Offshore Wind Market Report, (American Clean Power, 2023).
[8] Governor Lamont Signs Key Climate Change and Energy Legislation Codifying into Law His 2040 Zero-Carbon Target and Expanding Existing Renewable Energy Programs, (State of Connecticut, 2022).
[9] Governor Walz Signs Bill Moving Minnesota to 100 Percent Clean Energy by 2040, (State of Minnesota, 2023).
[10] Governor McKee Signs Historic Legislation Requiring 100% of Rhode Island’s Electricity to be Offset by Renewable Energy by 2033, (State of Rhode Island, 2022).