13 GW of wind, solar, battery delays hit US clean energy transition

Supply chain headwinds, logistics logjams and international trade barriers forced U.S. developers of wind, solar and battery storage projects to delay over 11.4 GW of capacity initially planned to come online in 2021, according to a new report highlighting challenges that could continue to hinder the nation's transition to cleaner sources of electricity.

"Supply chain constraints and trade barriers are among the major culprits and are expected to continue to hamper the growth of the industry for the foreseeable future," the American Clean Power Association said in a report released Feb. 15. The trade group, known as ACP, cited another 1,830 MW of delayed capacity at projects originally planned to come online in 2022 and 2023.

Given the roughly 13 GW of wind, solar and battery storage project postponements, some North American utilities are facing slower-than-expected growth of renewable energy generation and potential delays in retiring coal plants. Those challenges come despite mounting demand for cleaner fuels and more aggressive emissions reduction targets.

"There are areas where lead times are increasing, but we feel well positioned given the scale of the company and the approach that we're taking to manage what our customers require," Duke Energy Corp. Chair, President and CEO Lynn Good said about inflationary and procurement pressures during a Feb. 10 earnings call. "The gating issue has been availability. And then as you pursue alternatives, price can become an issue."

During its fourth-quarter 2021 earnings conference call, Duke executives told investors the timing of some renewable projects will shift within its five-year capital expenditure plan, including pushing off 400 MW to 500 MW of generation projects worth a combined $150 million to 2023 or later. Regulated projects remain on track.

Meanwhile, CMS Energy Corp. missed its 2021 capital spending target by about $200 million as some renewables projects were pushed into 2022 and 2023, but President and CEO Garrick Rochow emphasized that moving timelines are "pretty typical."

"I don't think there's been a year ... where I haven't seen projects move from year to year," Rochow said. "We're retiring coal, and so ... these projects aren't going away."

Analysts at KeyBanc Capital Markets identified renewable project spending and construction delays as an "emerging trend" that could also impact Pinnacle West Capital Corp., American Electric Power Co. Inc., Portland General Electric Co. and Otter Tail Corp.

"Slippage of renewable projects could present a headwind to growth, or at the very least, cap the upside or translate into the lower half of the range growth for a number of companies with heavier exposure to [near-term] project deliveries," the analysts wrote in a Feb. 13 note. "This is especially material for smaller companies with fewer opportunities to diversify their growth and lesser purchasing power."

'Looking at market purchases'

Of the 13 GW of postponed clean energy capacity identified by ACP, 48% is solar, 42% is wind and 10% is battery storage. Nearly 8,000 MW of capacity planned for last year was pushed to 2022, in many cases to the first quarter. Some 833 MW of capacity was delayed to 2023 or 2024 and more than 2,200 MW was "indefinitely delayed," according to the report.

The delays hit especially hard in the fourth quarter of 2021, when developers added 10,520 MW of solar, wind and battery capacity, a third less than in the final quarter of 2020, ACP said. The trade group's data does not include behind-the-meter batteries or rooftop solar.

The supply chain issues could, in some cases, prolong reliance on coal. PNM Resources Inc. is securing backstop power supplies, since new resources approved to replace the San Juan capacity will not be operational by the plant's June 30 retirement date.

"Our developers actually last year started providing notice that they could not meet the deadline, and as you know, there are supply chain issues," PNM Chairman, President and CEO Pat Vincent-Collawn told analysts Feb. 3. "We've got several options. We could keep the plant open a few months longer. We are looking at market purchases. ... but I can assure you we do have the resources covered for the summertime."

Battery storage developers Enphase Energy Inc. and Fluence Energy Inc. are working around soaring freight rates and raw materials prices, while AES Corp.'s stock price is suffering from a sector sell-off fueled in part by project interruptions. Tesla Inc. has been prioritizing lithium-ion battery supplies for electric vehicles at the expense of energy storage installations.

"You cannot air-ship batteries. ... It will not make economic sense," Enphase President and CEO Badri Kothandaraman said in a recent interview. "And if it has to be on a boat, then that is a logistics nightmare. We've got a problem. That's why our time on batteries is 14 to 16 weeks."

Fluence has secured more shipping capacity, increased the size of its supply chain and manufacturing teams, and plans to implement a raw-material indexing mechanism in future contracts to guard against commodity price spikes.

Pipelines remain strong

Despite the delays, clean energy developers showed strength in 2021 and have amassed large pipelines for the next several years.

The combined wind, solar and battery capacity dropped 3% from 2020 to 27,723 MW in 2021, according to the ACP report. That made 2021 the second-highest year for clean power installations after 2020, largely driven by demand in Texas, which added 7,352 MW of wind, solar and storage. California added 2,697 MW, followed by Oklahoma with 1,543 MW, Florida with 1,382 MW and New Mexico with 1,374 MW.

Wind capacity additions slid more than 25% to 12,747 MW last year, while solar increased 19% to 12,364 MW and battery storage jumped 196% to 2,599 MW. Storage energy capacity totaled 7,309 MWh in 2021, ACP said.

Entering 2022, 66,344 MW of solar, 23,868 MW of onshore wind, 17,458 MW of offshore wind and 12,501 MW/32,127 MWh of battery storage capacity are under construction or in advanced development, ACP said.