Bloomberg New Energy Finance (BloombergNEF) has raised its forecast for the US clean energy capacity addition between 2023 and 2030 by 19 GW from its previous estimate to a total of 619 GW. Analysts see ‘solar boom’ on the way for the US. 

It attributes this improvement in guidance, in less than 8 months, to equipment cost declines, load growth and strong demand for clean power supply. Analysts believe the clean energy market will overcome structural constraints, like permitting and grid connections, and higher cost of capital that are hampering more capacity from being built. 

BloombergNEF analysts believe, “The extension and expansion of tax credits in the Inflation Reduction Act (IRA) will partly offset higher interest rates. Some of the new subsidies and rules, such as the option to sell tax credits, if implemented carefully, will even make some projects very lucrative.” 

In its April 2023 forecast, BloombergNEF reportedly expected 358 GW of new solar PV capacity addition in the US between 2023 and 2030, which now with the 12 GW addition rises to 370 GW. 

The largest addition of 12 GW out of 19 GW increase has been allocated to solar PV projects that are currently battling higher costs of capital, challenges to grid connection availability and curtailment risks. It expects this growth to be driven by the residential solar segment that will likely overcome financing constraints. 

“The US is on track to reach record levels of investments in solar this year as plenty of capital chases projects,” opine the analysts. 

A ‘scant’ pipeline of onshore wind projects is expected to pull down installations of this technology in 2023, making it the 3rd consecutive year of decline. Some 3.2 GW projects have seen their offtake contracts being cancelled due to high inflation and interest rates. 

However, as the administration provides more certainty about tax benefits under the IRA, and transmission and permitting issues ease, onshore wind will exceed 11 GW of buildout by 2025 and reach up to 23 GW by 2030. 

For energy storage, analysts guide the capacity to reach 132 GW/460 GWh by 2030, encouraged by the utilities.  

Nonetheless, BloombergNEF admits that in the present times the US clean energy market is dealing with higher cost of debt, ‘squeezing the long-term levered returns’ for solar and wind projects. In such an environment, projects with secured grid connection are the first priority for investors. 

Offtakers under power purchase agreements (PPA) are pushing back against developers that try to pass higher project costs to them, as BloombergNEF expects weaker gas prices in the future.