For more than a decade I’ve been entrenched in the clean energy transition, experiencing the highs and lows that come with a rapidly growing industry. While 2023 was a challenging year, there’s no denying the stunning progress that’s been made. As we enter a new year I paused to reflect on that progress and offer some predictions for what the next few years will bring.
Ten years ago, as I was outlining a vision for what was to become CleanCapital, the landscape looked a lot different. The economy was in the midst of a strong recovery from the 2009 crash, and Obama’s Recovery Act — which included a first-of-its-kind direct pay provision—spurred a major expansion of renewable energy generation. The shift since then has been remarkable. From 2010 to now U.S. energy generation from coal has fallen 45% while renewable energy has grown 97%. At the same time costs have fallen, with the price of solar modules dropping over 90% since 2010. A consumer in 2010 could have paid a premium of more than 700% to procure energy from renewables instead of fossil fuels; today that energy costs 29% less than fossil fuel.
The increase of solar on the grid has likewise been astounding, growing nearly 50% per year on average since 2010. I’m proud of the role CleanCapital has played in that growth; to date, we’ve invested more than $1 billion in solar and storage projects and in companies that are developing impactful future projects. And all this in the distributed generation (DG) or C&I space, a critical segment in the energy transition that remains underinvested compared to utility- and residential-scale projects.
The passage of the Inflation Reduction Act in 2022 changed the game again and created powerful tailwinds for even-faster growth. But this year presented other challenges and an unpredictable landscape that inhibited progress. The slow administrative rollout of the IRA kept us in a holding pattern as we awaited the detailed provisions. The high interest rate environment, resulting from the Fed’s efforts to curb inflation, upended the debt markets and made previously financeable deals untenable. And wild weather caused by climate change continues to hurt project performance: our solar projects variously faced low insolation due to smoke from the Canadian wildfires, losses due to a major typhoon that struck Guam, and property damage due to wildfires on the West Coast.
Heading into 2024, I am bullish on the future of CleanCapital and of the industry at large. WoodMac predicted a tripling of solar installations in the next five years before the Fed indicated it would cut rates next year. We’re now anticipating a more favorable environment for financing the solar and storage projects in our pipeline and others’ so we can get more on the grid, faster. We now find ourselves at a critical moment where clean energy policy, technology, and finance are finally aligned for exponential growth. And companies like CleanCapital are right at the axis of executing on that potential. As I recently reminded our team, we have a heavy obligation to get it right: collectively the industry must add nearly 8 GW of renewable energy capacity by 2030 to keep the U.S. on track with its climate goals.
Below please find some predictions from me and my team for what to expect in the coming year:
“With so many corporations committed to clean energy targets that are fast coming, they will need to look for energy partners to navigate the waters and accelerate clean energy.
I anticipate corporate demand for clean energy to increase, and large Fortune 500 companies to play a huge role in the tax equity market.”
“Solar panel recycling has been a hot topic at many industry conferences this past year.
Concerns around material shortages and supply chain constraints have been a driving force of this conversation, as we search for new ways to minimize the need for newly extracted and imported materials. In 2024 we will see a more holistic approach to the way solar and storage projects are being developed and decommissioned. In addition, we will likely see more cross-functional partnership announcements that capitalize on the technology, policies, and finance available in the market. In 2024, it will no longer simply be closing the deal but about the sustainable integrity of each project.”
“All signs point to progress in clean energy.
Domestic manufacturing is increasing, grid capacity from solar is on the rise, more critical solar and storage projects are being built, and next will be the matching workforce demand. The IRA acted as rocket fuel to accelerate the demand for clean energy, making it a smart investment, and now an economic pillar for the country. To ignore the upcoming high demand for jobs in this industry will be detrimental to the longevity of our economy.”
“As we look for more ways to carry momentum in the clean energy transition, brownfields and land use will become a huge consideration in 2024.
There is an estimated 450,000 brownfield sites ready to transition to a platform for renewable energy. Many of these sites are positioned in areas in underserved markets. Dedicating time and resources to turn brownfields into bright fields will be a key driver in moving the needle for renewable energy. Additionally, as we look to multipurpose land use, we will see a growing number of cross-industry partnerships happen. More farmers and renewable professionals will come together to capitalize on advancing agrovoltaics, solar panel technology, and new policies that have yet to come. These two land use purposes will help to drive forward renewable energy and the economy.”
“The increase in ITC availability due to the IRA has made one reality clear – we are lacking the tax equity needed to build out the clean energy assets to effectively fight the climate crisis.
Come 2024 we will see new and innovative financing models, technology, and regulatory approaches to keep momentum. Additionally, I believe we will continue to remain a resilient industry. We have overcome harder obstacles and As with previous hurdles, we will devise creative solutions to address the current financing challenges.”
For more on our team’s 2024 outlook, watch our recent webinar. Please note that this webinar was filmed on December 13th just before the Fed announced rate cuts would be coming in 2024.