Renewable Energy

Public and Private Investment in Renewable Energy is Expanding, and So Is Generation Capacity

Wind farm on a grassy landscape
Credit: Anselm - stock.adobe.com

Renewable energy is a major focus for national governments and big businesses alike, especially amidst an increasing emphasis on combating global climate change. This news update brought to you by Ideal Power offers a round-up of just some of the most eye-catching headlines around renewable energy and the market opportunities associated with them. 

This month, we’re celebrating monumental expansions in wind energy generation capacity and an historic renewable energy deal by a leading automotive manufacturer. In addition, we’re examining how the U.S. climate legislation known as the Inflation Reduction Act could impact wind and solar expansion in the coming years.

Wind generation leads the way in new energy production capacity in the U.S.

Wind generated power accounted for more than one-third of the 15.1 gigawatts (GW) of new energy production capacity in the U.S. through the first half of 2022, according to the U.S. Department of Energy’s Energy Information Administration (EIA). Roughly 5.2 GW of wind generation capacity came online in H1, making it the fastest growing source of energy in the U.S. so far this year. New wind capacity was followed by expansions of 4.3 GW in natural gas, 4.2 GW in solar, and the remainder in battery energy storage, the agency reported.

An additional 29 GW of energy production capacity is planned from developers nationwide in H2. 13.6 GW of that total is expected to come from solar installations, while an additional 6 GW in wind generation capacity is expected to be added. 

The rapid expansion of renewable energy nationwide, even as natural gas continues to be a major source of energy production, underscores the increasing pace of transition towards clean sources of energy. A report from McKinsey published back in May suggests that roughly 50% of total energy production in the U.S. will come from renewable sources by 2050, and the expansion of renewable capacity now is instrumental in realizing that target. 

The expansion comes as non-renewable power plants wind down operations. According to the EIA, 8.8 GW of energy production capacity was retired in H1, the vast majority of that coming from coal-fired power plant closures. Roughly 12% of these retirements came from natural gas, and 9% from nuclear power plants.

Ford and DTE make historic renewable energy purchase

Ford and Michigan-based energy company DTE have announced an historic clean energy agreement that will help the automaker achieve its goal of becoming carbon neutral by 2050. The deal, which was reached earlier this month, would add 650 megawatts (MW) of solar capacity to Ford’s current manufacturing operations. The deal is the largest renewable energy purchase in U.S. history. 

“This unprecedented agreement is all about a greener and brighter future for Ford and for Michigan. Today is an example of what it looks like to lead [and] to turn talk into action,” said Jim Farley, CEO of Ford.

Thanks in part to the deal with DTE, Ford will be able to manufacture its electric Ford F-150 Lightning at the Rouge Electric Vehicle Center in Michigan using 100% clean energy sources by 2025. The expansion of DTE’s solar production capacity to meet Ford’s needs under the deal will increase Michigan’s production of clean energy by an estimated 70% statewide.

Inflation Reduction Act would double investment in wind and solar, study finds

The U.S. Inflation Reduction Act, which includes significant public spending for the expansion of wind and solar energy generation, would more than double investment in proliferating these renewable energy sources, according to a report by Princeton University. 

The Rapid Energy Policy Evaluation and Analysis Toolkit (REPEAT), published in partnership with Dartmouth College, Evolved Energy Research, and Carbon Impact Consulting, found that the Inflation Reduction Act would direct $321 billion toward renewable energy by 2030, an increase of more than $144 billion compared to estimates under current federal policies. That investment would translate to dramatically increased energy production capacities from renewable sources, including 39 GW of wind generation capacity and 49 GW of solar generation capacity per year starting in 2025 --- that’s more than five times the pace set in 2020.

If passed, the legislation would reduce nationwide energy expenditures by at least 4% by 2030, cutting about $50 billion in energy costs, according to REPEAT. Meanwhile, continued reduction in fossil fuel energy generation capacity would be expected to reduce demand -- and, in turn, costs -- for oil and gas products, compounding the savings.

The renewable energy outlook is strong

These developments are encouraging for proponents of renewable energy as public and private investment continues to increase. It will be critical to monitor pending legislation that would further support the expansion of renewable energy generation capacity nationwide to understand what the next several years may hold, but one thing is clear: renewable energy is growing and not going away. 

As a result, the long-term outlook of the renewables market remains bright. Analysis performed by Allied Market Research estimates that the space will grow in market value from $882 billion in 2020 to $2 trillion by 2030, an 8.4% compound annual growth rate (CAGR). Deloitte anticipates the major driving factors of this growth include increased innovation in technology, improved infrastructure development, and declining costs in renewable energy technology.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Dan Brdar

Dan Brdar is the President, CEO and a Director of Ideal Power. He has over 30 years of experience in the power systems and energy industries and has held a variety of leadership positions during his career. In addition to his role at Ideal Power, Dan previously served as President and CEO of FuelCell Energy Inc., a Nasdaq-listed company with a market cap of over $250 million.

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