More than $300 billion has been invested in cleantech in the US since the introduction of the Inflation Reduction Act (IRA) according to new findings from BloombergNEF. The Sustainable Energy in America Factbook, which is produced annually for the Business Council for Sustainable Energy, revealed that $303.3 billion in energy transition financing was deployed last year in the US[i]. This figure includes spending on renewable energy, electric vehicles and power grid investment. It means that on a global scale the US’s investment is second only to China, which spent $676 billion last year.
IRA tax credits were heralded as having helped spur energy storage deployment in the US last year, with this more than doubling when compared with 2022. The US commissioned an estimated 7.5 gigawatts (GW) of battery storage in 2023- a 62% rise year-on-year, to bring total installed capacity to 19.6GW. The renewables segment also benefited, with a record 42GW of new renewable power-generating capacity added the United States energy grid[ii].
The research also identified a notable uptick in the number of cleantech manufacturing facilities planned across North America, with these rising to 104 in response to the IRA as of December 2023. Together, these represent $123 billion in announced investments, with the majority being battery and solar facilities (34 each). The study found that the bulk of planned battery manufacturing facilities were for cell production intended to support the automotive industry. By the end of 2023, the US had 114GWh of lithium-ion battery manufacturing capacity, with this growing 28% year-on-year, however this still fell short of the predicted 178GWh that was anticipated to be commissioned by the end of last year.
Whilst overall cleantech investment has grown, BloombergNEF did identify some areas which fell short of expectations. Whilst the renewable sector made gains overall- solar energy saw records broken for large-scale projects and rooftop installations for example, the wind energy sector struggled, with new additions the lowest since 2015. Major issues hampering new on-shore wind energy additions in 2023 included interconnection delays, as well as a lack of early-stage development projects.
Further, many of the regions where the IRA tax credits have the most value are where wind already provides a high share of generation, thus there is suggestion that transmission congestion may be holding back new projects. Off-shore wind also failed to live up to expectations for 2023, as project cancellations and contract renegotiations hampered progress. BloombergNEF credits this to developers facing high costs of capital, and inflationary pressures.
The Biden administration has pledged to cut emissions by as much as 52% from 2005 levels by 2030. BloombergNEF’s analysis shows that 2023 emissions were only 16% below 2005 levels. The report states that the effectiveness of the US’s decarbonisation strategy is heavily tied to the IRA’s tax credits.
[i] 2024 Key Trends - The Business of Sustainable Energy (bcse.org)
[ii] Ibid
Lauren has extensive experience as an analyst and market researcher in the digital technology and travel sectors. She has a background in researching and forecasting emerging technologies, with a particular passion for the Videogames and eSports industries. She joined the Critical Information Group as Head of Reports and Market Research at GRC World Forums, and leads the content and data research team at the Zero Carbon Academy. “What drew me to the academy is the opportunity to add content and commentary around sustainability across a wealth of industries and sectors.”
