What policies are impacting the clean energy sector in the U.S.?
The U.S. is starting to make good progress but we’re behind other countries. Government policy is a driving force for the energy transition, across federal, state, and local regulations.
In late August 2022 we saw the historic passing of the Inflation Reduction Act (IRA), a game changer for the industry. The bill created more certainty in the market for traditional renewable sources and promoted the development and roll out of hydrogen. The IRA incentives reduce renewable energy costs for organizations like Green Power Partners, which include businesses, nonprofits, educational institutions, and state, local, and tribal organizations. Taking advantage of IRA incentives, such as tax credits, is key to lowering greenhouse gas emission footprints and accelerating the clean energy transition.
The investment tax credit (ITC) is a tax credit that reduces the federal income tax liability for a percentage of the cost of a solar system that is installed during the tax year. This is leading to increased development and adoption of clean energy, energy efficient products, and EVs. In tandem, it’s helping to establish and increase domestic manufacturing to support the renewable energy value chain.
This legislature is critical to creating certainty for investors, developers, and consumers. The commitment by our federal government allows us to continue to drive new technology cost parity in comparison to fossil fuel options, leading to widespread adoption.
During an election year government policy is a key topic of discussion and could shift depending on U.S. voters.Beyond corporate incentives, renewable policies also offer consumer incentives for using energy efficient appliances, rooftop solar and other sustainable efforts.
What opportunities and challenges do they bring?
Training and scaling the U.S.renewable energy workforce is one of the key challenges of the transition. The U.S. has thepeople, it’s a matter of reskilling talent to help fill new roles to drive clean energy production. This is also an opportunity for people to learn skills that will be highly in demand.
Technology, supply chain, and government policies are the three pillars supporting the energy transition. Industry leaders, government officials, organizations, and individuals all play a role in creating a better, cleaner future
The IRA is invigorating the domestic supply chain;however, it is not without challenges. Given the relatively long lead time to build and increase capacity, reliable partnerships are of the utmost importance. Organizations must partner with the right companies to meet their needs and provide necessary expertise.
For batteries in particular, there has been a lot of research and development, but it will take time to scale U.S. production. Majority of the raw materials for battery technology and cell production are imported from China so it’s important to build a resilient supply chain that includes traceability. The right partners with dedicated expertise and a global footprint, like Bureau Veritas, can help with traceability and ensuring materials are sourced appropriately. In the meantime, other countries are starting to produce and distribute these raw materials, offering more supply chain opportunities in the future.
It’s going to take several years for production to ramp up in the U.S. but through research and development, there’s some great technologies on the horizon, especially in the energy storage and green hydrogen space. Legislation contributes to the continued progress and overall reception and consumption of renewable energy.
Public awareness is critical to a successful energy transition. Rather than thinking short-term, individuals should feel like part of the solution for the long-term. This awareness also feeds back into public policy and government influence.
Ultimately the renewable energy industry is young and there is opportunity for education across the entire ecosystem, from policy makers to manufacturers and consumers. It’s important for leaders and industry experts to help stakeholders understand these new energy sources and what’s needed for their success.
What forms of clean energy are leading in the energy transition?
In the U.S., the majority of our renewables today are derived from solar. Looking ahead, offshore wind, particularly on the eastern seaboard, is really becoming the backbone of the energy transition. I believe we’ll see extreme growth in this area, from coast to coast. The idea of harnessing power from the sun and from the wind is not new but it’s important to be able to store, transmit and distribute it accordingly.
Connecting solar and wind resources to the grid will be complicated. It is increasingly important to strengthen the electric grid to be able to handle new energy and power conversion coming from these new energy sources.
What new technologies are supporting this transition?
The energy landscape is transforming.Variable renewables and energy storage technologies are becoming more efficient and cost-effective alternatives, resulting in new opportunities across the globe. Technology will play key role in renewable transition and the increased demand for energy storage systems.
A plethora of primary and back-up energy storage technologies developed and manufactured in the U.S. offer safe, scalable, efficient, and sustainable solutions. They are positioned to deliver longer duration storage and provide innovative systems to utility, commercial, industrial, and residential consumers. This includes enhancing carbon capture technologies and storage capacity. Long duration energy storage technologies, beyond the four-to-six-hour range, are critical to support energy intermittency.
As energy storage technologies advance, complexity and safety become more of a factor in determining the best solution.With a global supply chain, traceability and inspection technologies are also important to maintain compliance and build trust as the demand for renewable energy grows.
In the next five years, how will the industry evolve?
The industry is ripe for growth over the next five years. Technology, partnership, incentives and initiatives, and public demand will continue to drive the industry forward. Wind and solar in particular are positioned to dominate new power generation capacity in the coming decade and beyond. These technologies are on track to strengthen and diversify U.S. power generation.
In order to achieve our energy transition goals, battery innovation and storage must be top of mind to maintain a balance of supply and demand within the energy system. Given this, battery technology development in the near-term is crucial to global decarbonization strategy. Additionally, battery cell manufacturing must become more geographically diverse to increase access and build a more resilient supply chain. To meet the demand, the U.S. will need to substantially increase large scale installed battery storage over the next decade.
Thethree pillars supporting the energy transition are technology, supply chain and government policies.Industry leaders, government officials, organizations and individuals all play a role in creating a better, cleaner future.
