US demand for renewables grows in Q2 2023 despite challenges

Solar purchase prices increased in all markets.

Despite challenges caused by legislation and ongoing supply chain constraints, US demand for renewable electricity grew in Q2 2023. The growth was driven by higher certainty around the tax credits in the Inflation Reduction Act and an increase in commercial purchases looking to reduce their carbon footprint. Edison Energy’s Q2 Global Renewables Market Update revealed US median power purchase prices dropped due to a 30% increase in ERCOT wind and solar project inventory, which was responsible for the pricing moderation in solar. Wind prices fell in both ERCOT and SPP, with a sharp 20% decline in SPP due to additional competitively priced projects.

Solar purchase prices increased in all markets. Preliminary IRS guidance on the new clean energy tax structure included in the Inflation Reduction Act has brought more certainty to the US renewables market, enabling project developers to refine the cost to meet the requirements. The mild tailwinds, most developers have not observed any improvements, and buyers remain in a heightened-risk environment for renewable energy development and power transactions. Some developers have adopted a new strategy of waiting to market projects until they are almost or completely de-risked. US demand for renewable energy grew in Q2 2023 and is expected to continue growing.