Wood Mackenzie has stated that with the Inflation Reduction Act (IRA), which strengthens the economic competitiveness of renewable energy, annual capacity additions will almost triple to 110 GW in 10 years.
Speech at the RE+ conference in Las Vegas: Chris Seiple, vice president of energy and renewable energy at Wood Mackenzie, said: “The IRA has made renewable energy very competitive with other technologies and wholesale energy prices. As a result, we are seeing a rush of land for development sites and a resurgence of American manufacturing to support the renewable energy industry.”
“There are still challenges ahead, but overall, low-cost renewables represent a major investment opportunity and we expect annual capacity increases in 10 years to be almost three times what they are now,” he added.
According to Wood Mackenzie, the total cost of IRA tax credits is estimated to be $1.9 trillion by 2050.
Economic growth
This will provide the economic foundation for growth but will not ensure a completely smooth transition, Seiple added. “The complexity of converting the IRA into detailed rules has complicated the initial investment and slowed development, but the long-term forecast is solid. Ultimately, the economy will not be the biggest challenge to future growth, but issues such as connection queuing, transmission capacity and labor shortages could lead to bottlenecks.”
According to Wood Mackenzie, some advanced network technologies such as Direct Line Ratings (DLR) have the potential to provide short-term transmission solutions and expand network capacity.
Some studies suggest that DLRs can outperform static ratings 90% to 95% of the time and achieve capacity increases of more than 30%, he added.
Seiple added: “There are solutions now that can help alleviate the current problems, but they are not gaining traction quickly enough. Aside from these issues, we are also facing increasing extreme weather events, increasing pressure on networks around the world. In addressing these challenges, we expect the IRA to significantly reduce carbon emissions and lead to a zero-emissions power sector by 2032. While this is progress, it is not enough to put us on the right path to sufficiently limiting the extent of climate change.
