Holding Steady: The 2023 Renewables Market Outlook
Despite a market constrained by rising costs, supply chain disruption, trade policy uncertainty, inflation and interconnection delays, renewable energy deployments are expected to ramp up in the next two years thanks to federal legislation.
Four trends in renewable energy development we’re watching for 2023:
Offshore Wind: As we wrote about last year, the U.S. offshore wind pipeline continues to grow with 42 megawatts of capacity operational, another 1 gigawatt under construction and nearly 19 gigawatts in the permitting phase. Rising labor and inflation costs and a lengthy approvals process will continue to determine speed to market.
Carbon-Free America: Solar and wind capacity accounted for 70% of the new capacity added to the share of U.S. electricity generation from renewable energy and remain some of the cheapest energy sources in most areas. As of October 2022, 43 of the 45 largest U.S. investor-owned utilities have committed to reducing their carbon emissions; boosting renewables is a key strategy to meeting their commitments. Buoyed by solar and wind tax credits that begin construction before 2025, we’ll continue to see growth in these markets.
Renewable Energy Cybersecurity: Renewable energy sources are becoming more likely targets for cyberattacks, and we’ll likely see utilities and renewable developers staffing up cybersecurity departments.
Ongoing Labor Shortage: One of the factors experts say will help the U.S. avoid a severe recession is the ongoing labor shortage. Currently, the construction industry is short nearly 440,000 workers, according to McKinsey. With the aging construction workforce, construction firms aren’t expected to cut a significant number of workers for fear they will leave the industry, similar to the departure we saw in the Great Recession.
Despite recession threats, three key markets are likely to see significant growth in 2023 according to the Dodge Construction Starts Forecast:
Infrastructure: Only 19% of funding from the $1.2 trillion IIJA legislation has been allocated thus far
Power: Because more than 70% of the U.S. power grid at least 25 years old, and a doubling of transmission capacity is needed by 2030, $13 billion in financing was made available from the federal government for states, utilities and others to complete upgrades.
Manufacturing: The sector saw 196% growth in 2022 as the renewable energy sector’s needs for clean energy components are outpacing U.S. manufacturing output and supply chains. Inflation Reduction Act incentives and policies will drive new plant announcements.
If your 2023 plans call for significant hiring in key roles throughout the renewable energy development pipeline, we have candidates available. Contact us today to learn more.