Wind, solar and battery power are growing despite economic challenges

With new solar energy at the forefront, renewables will expand at an astonishing speed in 2023, a trend that, if scaled up, will help move the Earth off fossil fuels and avoid dangerous global warming and its effects.

Clean energies are currently some of the least expensive, which explains part of the growth. Countries have also adopted policies to support renewable energy, in some cases citing energy security concerns, according to the International Energy Agency. These factors offset high interest rates and ongoing challenges in obtaining materials and components in many places.

The International Energy Agency expects more than 440 gigawatts of renewable energy to be added in 2023, more than the total installed energy capacity of Germany and Spain combined.

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Below is a summary of this year in the field of solar energy, wind energy and batteries.

Another outstanding year for solar energy

China, Europe and the United States set records for installing solar energy in a single year, according to the International Renewable Energy Agency (IRENA).

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The increase in China exceeded that of all other countries, and ranged between 180 and 230 gigawatts, depending on the results of the projects at the end of the year. Europe increased its capacity by 58 gigawatts.

Solar energy is currently the cheapest form of electricity in most countries. Solar panel prices fell by a staggering 40-53% in Europe between December 2022 and November 2023, and are now at their lowest value in history.

“In Europe especially, the speed of expansion has been astonishing,” says Michael Taylor, senior analyst at IRENA.

When final numbers are released for 2023, solar is expected to overtake hydropower in total capacity globally, but in terms of energy actually produced, hydropower will still be ahead in producing clean energy for some time, because it operates 24 hours a day.

In the United States, California remains the leading producer of solar energy, followed by Texas, North Carolina, and Arizona.

State and federal incentives have had a significant impact on the growth of solar energy in the United States, according to Daniel Brissett, president of the Institute for Environmental and Energy Studies, a nonprofit education and policy-making organization.

Although solar energy is a success in 2023, there are obstacles. There was a shortage of transformers, Brissett warns, and interest rates rose.

In the USA, solar equipment manufacturing has also seen growth. “We have seen the impact of the inflation reduction law on investment growth,” says Abigail Ross Hopper, President and CEO of the Solar Industries Association. “More than 60 solar equipment manufacturing facilities have been announced over the past year.” .

Wind energy challenges

By the end of 2023, the world had increased enough wind power to power nearly 80 million homes, making it a record year.

As is the case with solar, most of the growth, more than 58 gigawatts, came from China, according to research by consultancy Wood Mackenzie. China is on track to exceed its ambitious 2030 target of producing 1,200 gigawatts of utility-scale solar and wind power, five years ahead of schedule if planned projects are completed, according to the global energy watchdog.

China was one of the few markets to grow this year in wind energy, according to the World Wind Energy Council. Accelerating licensing and other improvements in key markets such as Germany and India have also helped expand wind power. But installations were down 6% in Europe compared to the previous year, according to Wood Mackenzie.

Short-term challenges such as high inflation, rising interest rates, and the cost of construction materials have forced some oceanic wind developers to renegotiate or even cancel project contracts, and some onshore wind developers have been forced to postpone projects to 2024 or 2025.

The economic headwinds have come at a difficult time for the nascent U.S. offshore wind industry, which is trying to launch the country’s first commercial-scale offshore wind farms. Work on two of them began last year. Both aim to open their doors in early 2024, and one site is already sending electricity to the US grid. Large offshore wind farms have been producing energy for thirty years in Europe and, more recently, in Asia.

After years of record growth, the American Clean Power Group (ACP) projects that by the end of 2023, less onshore wind capacity will be added in the United States, enough to power about 2.7 to 3 million homes. The group explains that developers are benefiting from new tax breaks approved last year with the inflation reduction law, but it takes years to put projects into practice. Since the issuance of this law, investments worth $383 billion (1.87 trillion riyals) have been announced in clean energy, according to the group.

“We talk about 2023 as an underperforming year, but looking more broadly, 8 to 9 gigawatts is still an exciting number,” says John Hensley, vice president of research and analysis at ACP. the network”.

Globally, the increase in wind energy was also slower last year. The three main markets this year were China, the US and Germany for onshore wind energy, and China, the UK and Germany for offshore production.

Analysts expect the global industry to rebound this year and provide wind energy by an additional 12% worldwide.

In June, the sector celebrated surpassing 1 terawatt of installed wind capacity worldwide. It has taken more than 40 years to reach this milestone, but a second terawatt could take less than 7 years at the current industry pace.

Big year for batteries

Amid growing pressure to make transportation less climate friendly, the electric vehicle trend will accelerate globally in 2023, with a fifth of cars sold expected to be electric, according to the International Energy Agency. That means it’s also been a great year for batteries.

More than $43.4 billion will be spent on battery manufacturing and recycling in the U.S. alone in 2023, thanks in large part to the FRA, according to Atlas Public Policy. This puts the United States closer to Europe, but still far behind China, the battery powerhouse.

At the end of November, both the United States and Europe had 38 large battery factories under construction, or so-called “megafactories,” according to metal intelligence agency Benchmark. However, China had 295 projects in progress.

The industry has continued to explore different ways to manufacture batteries without relying heavily on harmful materials, as well as ways to make components more sustainable, and the battery recycling industry has made progress, according to experts.

The cost of key battery raw materials, including lithium, has also fallen significantly, according to Evan Hartley, a senior analyst at Benchmark.

“The cost of batteries is now on a path that allows most Americans to buy an electric car,” says Paul Brown, a professor of materials science and engineering at the University of Illinois.

2023 has not been an easy ride. The US industry in particular has faced many headwinds. A massive Panasonic battery manufacturing facility in Kansas has struggled with energy challenges. Toyota needs to hire a pool of talent for its facility in North Carolina. Health and safety violations were found at a joint venture between General Motors and LG Energy Solution in Ohio. The list goes on.

Regardless of the region, challenges remain regarding minerals, responsible supply chains, and expanding shipping infrastructure. “That will be the next item on the agenda,” says John Eichberger, executive director of the Transportation Energy Institute.

But experts are optimistic that the battery sector will continue to grow around the world.

“The battery story in the U.S., on a small scale, is the battery story globally, on a large scale, in 2023,” says Dan Walter, director of the strategy team at the Rocky Mountain Institute, a sustainability research group. “How is this change significant in 2023?

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AP’s climate and environment coverage receives support from many private foundations. Learn more about AP’s climate initiative here. AP is solely responsible for all content.

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