Major PV & Storage Projects – 2021 vs. 2022

https://energycentral.com/c/gn/pv-and-storage-fall-2022

Criteria

To be considered a “large” project, a given project must have an output of 100 MW from at least one of the two technologies: Photovoltaic (PV) and / or Battery Energy Storage. Each project must be commissioned and operational in the applicable year and provide the above described minimum output. Although projects do not necessarily be at one site, they need to be coordinated, be in a contiguous time-frame and use the same primary developer.

Comments

There is one huge difference in the two years’ tables: whereas 2021 had over 10,000 MW of the PV Projects, 2022 had less than 4,000 MW. BESS Projects (or parts of projects) showed modest growth (roughly 1800 MW to 2,200 MW), however I would have expected more growth. The big question is, what caused this?

First of all, many projects that were scheduled to be completed in 2022 slipped into 2023. The big question is: why? I believe that I’ve identified two potential reasons, one large and one small, and the former impacted the latter. First the small reason: supply-chain issues. Although most project developers were not forthcoming on the reasons for the slip (they mostly just stayed quite) a few developers did cite supply-chain issues. I believe that most developers still tend to use project components from China, although U.S Suppliers of these components appear to be rapidly expanding. You can read (or hear / see) in the news the issues China has been having in the last year (mainly related to their failed COVID-19 policy). Thus, this is a valid concern.

The big reason is related to the Inflation Reduction Act’s changes to the Investment Tax Credit (ITC) and Production Tax Credit (PTC) for these projects. The best description of these I found is referenced here.[1] Note that there is a nice table at the beginning of this document, and this shows a major transition of these incentives between 2022 and 2023. These dates are “Start of Construction.” Later in the document is a section: “What does ‘commence construction’ mean?” that goes into details regarding this question. From the details it sounds like there is much wiggle room in this question.

A major part of the difference between 2022 and 2023 start of construction is a 10% Domestic Content Bonus for the ITC and a 2% Domestic Content Bonus in the PTC. I would guess that much of the project developers stopping their work on these projects is centered on their trying to qualify the projects for these bonuses (thus slip their projects from 2022 to 2023 start of construction). Furthermore I would guess this is causing a major (additional) disruption to the supply-chain. See a later section of this document: “What are the bonus credits?” for more information.

This is a complex issue, and even with all of the work that I’ve done in researching this, I would guess that there will be many zigs and zags before this is worked out.