Why did US wind installations slump 37% in 2022?

• US wind installations of 8.6GW in 2022 were just half the level they were in 2020
• This is despite support in the US Government's $369bn Inflation Reduction Act
• Developers face challenges with permitting, supply chains and grid queues

‍

Historic. Momentous. Transformational. We’ve all heard the superlative-laden spiel about the Biden administration’s $369bn Inflation Reduction Act. 

But the 2022 statistics tell a less positive story about US onshore wind. The American Clean Power Association has reported that onshore wind farms totalling 8.6GW were completed in the US in 2022. That is the lowest since 2018, a drop of 37% year-on-year, and around half of the record 16.6GW completed in 2020.

Annual onshore wind installations of 8.6GW is not disastrous. It’s broadly in line with installations most years since 2015, when the sector gained a five-year extension of the wind production tax credit (PTC) in the final months of Barack Obama’s second presidential term. That change led to the record-breaking 2020 because developers wanted to bring their projects online before the PTC window was due to shut forever. 

But that closure didn’t happen. The PTC was extended in 2019 and 2020 under the Trump administration, along with the solar investment tax credit (ITC), and support has continued under President Biden with the IRA. This support for renewables has been unprecedented in US history for both its length and the clarity it gives investors.

This has unlocked huge interest in new projects – and that is part of the problem.

Developers and investors are facing similar challenges as their peers in other parts of the world, including supply chain constraints and permitting delays. But those in the US are also facing challenges caused by lengthening interconnection queues, due to the major wave of development activity that policy support has unleashed.

Interconnection queues

In April 2022, the Lawrence Berkeley National Laboratory (LBNL) reported 1.4TW of wind, solar and transmission projects were in queues at the end of 2021 to gain grid connections across the US. The number of requests has increased year-on-year during the last decade as interest in renewable energy generation has grown.

That research showed that 676GW of solar, 427MW of energy storage, 170GW of onshore wind and 77GW of offshore wind projects were awaiting connections; and those queues will only have increased in 2022 because of the IRA. This has driven up average waits between connection requests to commercial operations from 2.1 years for projects built in 2000-2010 to 3.7 years for projects built in 2011-2021. It also shows how the growth of solar and storage are a challenge for wind projects.

We will only see that continue to grow unless there is reform of the system – and we are seeing approaches emerging that could help to alleviate these delays. 

From this month, PJM Interconnection is set to start introducing changes to how it deals with projects in grid queue in the 13 states it covers in the northeast US. The Federal Energy Regulatory Commission backed these changes in November, and they are intended to help PJM clear its 250GW project backlog by 2026.

One of its main policies is a ‘first-ready, first-served approach’ that will remove from consideration the speculative projects that are delaying the process. One problem in the current system is that only 23% of projects that entered interconnection queues from 2000 to 2016 went on to commercial operation, with 72% eventually withdrawn. 

In addition, the length of the timescales has encouraged developers to submit their projects early, and sometimes even before they have secured land for the project. PJM wants to focus its attention on the project most likely to proceed. It is also set to take a clustered approach, whereby it seeks to consider projects in clusters to help streamline its work. Other grid operators will no doubt be watching this closely.

Interconnection queues are just one part of the picture. Grid operators also need to build transmission links to boost grid capacity, including high-voltage cross-border links that have the added difficulty of dealing with more than one state. They could also benefit from additional data about the projects in their pipelines, to help them identify those with the most potential and others that are far too speculative.

Fixing US interconnection queues will require a combination of policy and technical solutions. This will not be a panacea for all the industry’s ills, but it will be a big help.