Surging global energy prices are supercharging the already rapid pace of growth in solar, wind, and battery storage projects, according to the Institute for Energy Economics and Financial Analysis US 2022 Power Sector Outlook.
Last year, IEEFA predicted that wind, solar and hydro would account for almost 30% of the US electric power market by the end of 2026. Given the growth over the last year, IEEFA now expects the figure is likely to hit 33%. Combined with current nuclear generation, more than half of the US electricity supply would come from carbon-free sources.
“With fossil fuel price volatility and energy security currently among the top concerns of executives and policymakers, IEEFA finds the energy transition is tipping even more strongly toward renewables and battery storage, and that this trend will continue to drive fossil fuels out of the power market,” said Dennis Wamsted, an IEEFA analyst/editor and co-author of the annual report, in a press release.
The 2022 outlook noted a handful of recent developments pointing to the continued growth of renewable power sources:
- Construction has begun on the first two commercial-scale offshore wind farms in the US, off the coasts of New York and New Jersey.
- Major utilities that have traditionally relied on coal—including Georgia Power, Duke Energy and the Tennessee Valley Authority—are planning to shift to renewable sources by 2035.
- The total annual amount of gas-fired electricity generation has apparently peaked and continues to be displaced by solar and wind output.
- Corporate renewable energy demand is climbing and could drive the construction of as much as 94 gigawatts of renewable energy capacity by 2030.
- Increasingly high levels of renewable energy with battery storage are being integrated into the US power grid while maintaining system reliability.
“The compelling economics and proven reliability of renewable energy and storage have changed perceptions in utility and corporate boardrooms across the U.S., driving a buildout of wind and solar generation portfolios and prompting businesses and consumers to push for greater access to green energy,” said Seth Feaster, an IEEFA energy data analyst and co-author of the report, in a press release.
The latest outlook also identified two major developments to watch during the current year:
- The potential for green hydrogen to play a bigger role in the transition from fossil fuels, and
- The potential for electric vehicles to be a grid resource, rather than just adding demand.