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1、ATLANTAAUSTINLOS ANGELES MINNEAPOLIS NASHVILLENEW YORKSEATTLECascadia CapitalApril 2024Energy TransitionThis presentation is being furnished by Cascadia Capital,LLC(“Cascadia”)to the recipient and is intended as an outline of matters for informational and discussion purposes only.The information con

2、tained in this presentation,including any market data and industry information,has been derived entirely from material supplied by public sources,which Cascadia believes to be accurate;however,no independent verification of such material has been made and any estimates made by Cascadia based on mate

3、rial from such sources are by their nature inherently inexact.Accordingly,Cascadia does not make any representation or warranty,nor is any such representation or warranty implied,as to the accuracy or completeness of the information contained herein,and Cascadia is not responsible for any misstateme

4、nts or omissions in this presentation.Cascadia has no obligation to update the information contained herein.This presentation may include certain statements,estimates and projections with respect to a company,or industry,including certain forward-looking statements.Any such statements,estimates and

5、projections reflect various assumptions,which may or may not prove to be accurate or correct,concerning anticipated results and are subject to significant business,economic and competitive uncertainties and contingencies,all of which are beyond the control of Cascadia.Accordingly,there can be no ass

6、urance that such statements,estimates and projections will be realized.Such statements,estimates and projections are likely to vary from actual results and those variations may be material.No such statements,estimates or projections constitute a guarantee,promise,forecast or prediction of the future

7、 and Cascadia does not represent or warrant that any estimates or projections will be achieved.Cascadia neither:(i)accepts responsibility for or makes representations as to the accuracy or completeness of any forward-looking statements,estimates or projections contained in this presentation,nor(ii)u

8、ndertakes any obligation to update or revise any forward-looking statements,estimates or projections for any reason after the date of this presentation.All financial data in this presentation is provided for informational and discussion purposes only.Past performance is not necessarily indicative,or

9、 a guarantee,of future results.There can be no assurance that any Cascadia project will achieve comparable results as those presented herein.The information contained in this presentation is strictly confidential and may not be reproduced,distributed,disclosed or disseminated,in whole or in part,to

10、any third party without the prior written consent of Cascadia.Disclaimer23Cascadia Capital OverviewCascadia is an independent advisory only investment bank,partnering with clients across the nation to deliver transaction advisory services globally.With this scale and a wide variety of backgrounds an

11、d perspectives,we work together as a team in each deal for the common success of our client stakeholdersLeveraging deep sub-vertical industry knowledge,a unique process orientation that marries creative storytelling,modularity and traditional process rigor,and a long-term partnership approach,we aim

12、 to deliver optimal value for our clients.We are not rooted in traditional methods and reliant on a one-size-fits-all methodology.Rather,we create a custom deal strategy designed to leverage your attributes and overcome impediments that,when effectively deployed,drives outcomes outside the norm on v

13、aluation,terms and other qualitative aspects of your transactionExecutive OverviewJamie Boyd is a Managing Director and has been an investment banker at Cascadia since 2004.Jamie leads the origination and execution responsibilities for a global client base seeking M&A,capital raise and complex corpo

14、rate finance advice.He founded and leads the firms Energy Transition and Climate Technology group,in addition to co-founding the firms Robotics,Automation&Artificial Intelligence investment banking group.Jamie holds a Bachelor of Commerce(BCom)degree from the Sauder School of Business at the Univers

15、ity of British Columbia,a Juris Doctor(JD)degree from Gonzaga University School of Law,where he was a Thomas More Scholar,and a Master of Laws(LLM)degree from New York University School of LawJamie BoydManaging DirectorEnergy Transition and Climate TechEnergy Transition Spotlight Onshoring Landscape

16、ITable of ContentsMacroeconomic Indicators and Industry InsightsIIM&A and Public Market UpdateIIICascadia Industry Team OverviewIVCascadia Firm OverviewVAppendixVIReference ListVIIAlex SmithVice PresidentEnergy Transition and Climate TechScott WhitingAssociateEnergy Transition and Climate TechExecut

17、ive Summary4Notable M&A TransactionsChinas dominance of the global clean energy market,along with geopolitical complexities and supply chain constraints,has driven the US to onshore its renewable energy productionThe energy transition sector in the US has grown tremendously in the past two years,dri

18、ven by the announcement of government initiatives such as the Inflation Reduction Act(IRA),the Infrastructure Investment and Jobs Act(IIJA),and the Bipartisan Infrastructure Law(BIL)In North America,the energy transition sector is expected to grow at a CAGR of 10%from$828B in 2023 to$1,749B by 2031,

19、driven by increased investments,legislative initiatives,and the growth of multiple sub-sectors,including renewable energy,solar energy,wind energy,and battery storageThe renewable energy sector in the US is projected to grow from$152B in 2024 to$364B in 2030,registering a CAGR of 16%during this peri

20、odoInnovations in the solar energy market in the US over the past few years have resulted in enhanced efficiency,which is projected to increase to 29%by 2025 from 20%in 2023.These innovations have also resulted in cost reductions.The International Renewable Energy Agency(IRENA)predicts a 59%decrease

21、 in the cost of electricity generated by solar photovoltaics(PVs)by 2025oThe wind energy market is witnessing significant investments in offshore wind as well as collaborations between wind energy developers,technology providers,utility companies,and government agencies to expand offshore wind capac

22、ity in the USoThe battery storage market in the US is expected to grow primarily due to the rising demand for renewable energy and a shift toward electric vehicles(EVs),which are expected to account for 30%of the total new car sales by 2030.Additionally,US-based automakers such as Volvo and Ford exp

23、ect EVs to account for 4050%of their new sales by 2035,while companies such as General Motors aim to cease the sales of gasoline vehicles by 2035Wind energy is the dominant sub-sector in the renewable energy space,and is expected to account for 12%in the total US power generation mix by 2024,up from

24、 9%in 2021Amid supply chain challenges,shortage of skilled labor,and high costs of setting up renewable energy plants,the energy transition sector is witnessing innovations such as floating offshore wind and solar farms,perovskite silicon tandems,redox batteries,solid-state battery technology,etc.,w

25、hich are aimed at enhancing the efficiency of renewable energy across the country$1,200mmNA$261mm$2,800mm$102mm$1,000mm$250mm NA Acquired byAcquired byAcquired byAcquired byNotable Capital Raise TransactionsGrowth/ExpansionGrowth/ExpansionGrowth/ExpansionGrowth/Expansion5Section IEnergy Transition S

26、potlight Onshoring LandscapeNations across the globe are steadily dedicating resources to the advancement of renewable energy,bolstering their capacities for its generation.Over the past few decades,China has emerged as a significant player in renewable energy production,solidifying its position as

27、a global leader in the fieldState of the Global Clean Energy Landscape:Chinas Renewable Energy DominanceCountries worldwide,including the US,find themselves relying on Chinas large clean energy production capabilities,and this global dominance of China is one of the major factors driving onshoring i

28、nitiatives across the worldThis dominance is a consequence of large strategic investments by China in the clean energy sector.In 2023,the countrys commitment to clean energy soared to an impressive$896 billion1,marking a 40%1 year-on-year increase from 2022.Clean energy contributed$1.6 trillion to C

29、hinas economy,accounting for 40%of the countrys expansion of GDP in 2023In the same year,Chinas solar energy sector grew 63%1,with a significant increase in polysilicon and production capacities.Meanwhile,the wind energy sector witnessed an 84%1 year-on-year increase in new wind power capacity withi

30、n the first 11 months,driven by favorable government policies and repowering initiativesIn 2023,the countrys energy storage capacity reached 34.5 GW2,with a surge in both power and energy scale.For the third consecutive year,newly installed capacity exceeded the existing installed capacity6Energy Tr

31、ansition SpotlightIt is predicted that the scale of the domestic energy storage market will maintain rapid growth in 2024,with new installed capacity throughout the year exceeding 35 GW.”Yue Fen,Deputy Secretary-General,Zhongguancun Energy Storage Industry Technology Alliance(Jan 24)Heavy Reliance o

32、f the US on ChinaThere is heavy reliance of the US on China for renewable energy manufacturing.About 75%3 of the silicon solar cells incorporated into modules installed in the US are made by Chinese subsidiaries located in just three Southeast Asian countries:Vietnam,Malaysia,and Thailand.Further,Ch

33、ina accounted for the largest share(88%)4 of battery imports in the US in the first quarter of 2023,increasing from 78%4 in 2022Chinas unwavering strategic investments in renewable energy not only has driven its economic growth but also established it as a pivotal player in the worldwide clean energ

34、y arena.Its significant presence in solar,wind,and energy storage industries highlights its indispensable role in shaping the trajectory of sustainable energyThe countrys dominance in global manufacturing,compounded by the ongoing conflict between Russia and Ukraine,heightens the challenges faced by

35、 supply chains in the US.This conflict has amplified supply chain volatility and disruptions and made global supply networks increasingly vulnerableThe weaponization of energy dominance by Russia has stirred unease in countries in the West,which fear similar tactics from China.Thus,the US is shiftin

36、g toward onshoring/near-shoring practicesSource:Refer to Pg.87 Energy Transition Spotlight(Cont.)Forces Behind the Reshoring Wave The renewable energy sector in the US has witnessed a notable shift from offshoring to reshoring and near-shoring practices.This change is primarily driven by:Supply Chai

37、n Vulnerabilities:Events such as the COVID-19 pandemic and the Russia-Ukraine conflict have underscored the risks of heavy reliance on offshore manufacturing,particularly in the renewable energy space.Such heavy reliance leads to supply chain vulnerabilities which poses risk of volatility in the bus

38、iness environment and may even lead to disruptions in manufacturing operationsEnergy Security Concerns:Chinas dominance in manufacturing for renewable energy and its position as a major supplier of critical minerals has raised concerns about dependency.The countrys significant share in global manufa

39、cturing capacity for solar PVs,wind systems,lithium,nickel,and cobalt has accentuated these worriesEnvironmental,Social,and Governance(ESG)Considerations:Increasing pressure from investors,consumers,and regulatory bodies to prioritize sustainability and ethical business practices is driving companie

40、s in the US to shift manufacturing operations to countries with stronger environmental and labor standardsCost Efficiency:While labor and production costs in China have traditionally been lower than in the US,factors such as rising wages,transportation expenses,tariffs,and intellectual property risk

41、s are narrowing the cost gapAs the onshoring of renewable energy manufacturing gains momentum in the US,companies must carefully consider various factors to ensure the successful relocation of their operations back to the country7Strategic Considerations for Onshoring SuccessSome critical factors th

42、at impact the onshoring of renewable manufacturing operations include site locations and the implementation of optimal logistics operations for streamlined manufacturing processesSite Location:When considering onshoring opportunities,selecting the right location is paramount.Factors such as power an

43、d water availability,permitting and zoning requirements,and proximity to transport hubs,raw material suppliers,and key customers must be carefully evaluatedTax and Property Incentives:A rigorous assessment of tax implications and property costs is essential for onshoring.While upfront costs may be h

44、igher in the US,a thorough analysis of state-level incentives,including tax exemptions,deductions,and credits tailored for the renewable energy sector,can significantly mitigate financial burdensLabor Availability:Securing skilled talent is vital for operational excellence.While producers in the US

45、face potential challenges associated with higher labor costs and stringent regulatory frameworks such as OSHA,leveraging advanced automation technologies can optimize workforce efficiency and mitigate labor-related expensesStreamlined Logistics:Streamlining of logistical processes is imperative for

46、cost-effective operations.By strategically locating inventory and optimizing supply chain networks,organizations can minimize shipping costs,reduce lead times,and enhance overall operational agility,particularly for high-value equipment and machinery,which can have high per-unit shipping costsEnergy

47、 Transition Spotlight(Cont.)8Key Constraints for Onshoring in the USAs companies formulate strategies for successful onshoring operations,they can encounter various hurdlesThe US reliance on China for crucial components and materials vital to renewable energy production has become a significant conc

48、ern when it comes to onshoring.China holds dominance in the processing of various minerals,particularly rare earth elements(REEs),and the refining of lithium and cobalt.It also controlled more than 75%1 of the global battery cell production in 2022Furthermore,the renewable energy industry in the US

49、grapples with the dual challenges of high costs and labor shortages.According to the Interstate Renewable Energy Council(IREC),44%2 of surveyed solar companies in the US struggled to hire qualified workers in 2022.The country anticipates a demand for 40,0003 electricians,9,0003 welders,7,0003 wind t

50、echnicians,and additional skilled labor beyond current projections.The US labor costs are higher than in Southeast Asia,with average manufacturing wages in Indonesia and China being$2.514 and$3.674 per hour,respectively,while for the US it is around$7.255 per hourRealizing the importance of energy i

51、ndependence,the US government is actively pursuing initiatives aimed at diminishing its reliance on China for clean energy and renewable resources.Through targeted policies and investments,the country aims to bolster domestic production,foster innovation in sustainable energy technologies,and create

52、 a more resilient and self-sufficient energy futureGovernment Initiatives:Catalysts for OnshoringThe US governments initiatives,including the CHIPS Act,IRA,and IIJA,aim to boost domestic production and reshoring investments,fostering supply chain resilience and economic competitivenessAnti-Dumping D

53、uties:Imposition of anti-dumping duties on solar panel producers in China has led to relocation of production to other Southeast Asian countries,impacting access to solar panels in the USUyghur Forced Labor Act:Legislation banning imports from Chinas Xinjiang province has further complicated the sol

54、ar energy market,restricting the import of panels into the USCHIPS Act:This legislation focuses on strengthening the semiconductor industry through funding and incentives for semiconductor research and production,helping address a crucial component in the renewable energy supply chainInfrastructure

55、Investment and Jobs Act(IIJA):The IIJA represents a significant investment in the nations infrastructure,including provisions that directly benefit the renewable energy sector.It aims to modernize the energy grid,enhance transportation networks,and support the deployment of renewable energy sourcesC

56、hinas Presence in the Clean Energy Space in the US:Mitigation of Security Risks while Promoting Green Technology DevelopmentChina-based clean energy firms are establishing a presence in the US by partnering with local companies.A notable example is Contemporary Amperex Technology Co.Limiteds(CATL)co

57、llaboration with Ford for battery manufacturing,highlighting the political sensitivity surrounding such partnerships.The challenge for the US lies in managing these partnerships to mitigate security risks while also fostering the development and adoption of green technologies.Source:Refer to Pg.87 9

58、The Clean Energy for America Act:The Act provides robust financial incentives to encourage the onshoring of renewable energy manufacturing.Beginning in 2023,the act offers a generous 30%tax credit for investments in renewable energy facilities or electric grid enhancements,with a 40%tax credit earma

59、rked for projects situated in disadvantaged communities1.Furthermore,the proposed domestic content credit within the act aims to augment renewable energy tax credits by an additional 10%,serving as a strong catalyst for increased investment in the sectorInflation Reduction Act(IRA):The IRA is a land

60、mark legislation specifically targeting the energy and climate sector.It allocates a substantial$369 billion for energy and climate initiatives2,making it one of the most significant investments in clean energy in the history of the USIn-depth Look at the IRAThe IRA has a direct impact on the renewa

61、ble energy sector,particularly in the areas of solar,wind,and battery storage.Its$369 billion allocation for energy and climate initiatives is expected to more than triple the clean energy production in the US,with about 40%of the countrys energy expected to be produced from renewable sources such a

62、s wind and solar by 20302.IRA incentives reduce renewable energy costs for businesses,non-profits,educational institutions,and state,local,and tribal organizations that are part of the Green Power Partnership program(a program to encourage organizations to use green power voluntarily to protect huma

63、n health and the environment)Energy Transition Spotlight(Cont.)Direct Pay and Transfer OptionsThe act has also introduced new direct pay and transfer options,enabling more organizations to utilize clean energy tax credits for equipment put into operation between January 1,2023,and December 31,2032.E

64、ntities such as state,local,and tribal governments,as well as rural electric cooperatives,can now directly monetize specific tax credits,receiving a direct payment from the IRS for any amount paid in excess of their tax liability for credits.Additionally,eligible entities that are not tax-exempt can

65、 transfer all or a portion of certain tax credits to an unrelated partyConcurrently,various companies in the country are actively engaging in reshoring activities.For instance,Qcells North Americas substantial investment of$2.5 billion in 2023 for solar manufacturing facilities in Georgia,boasting a

66、 manufacturing capacity of 3.3 gigawatts3,exemplifies the strategic initiatives being taken within the industry.Tax Incentives to Promote Renewable Energy Production The IRA has established long-term energy tax credit structures,providing companies with tax incentives for the next 10 years compared

67、with previous on-again,off-again incentives.This initiative is aimed at averting the boom and bust cycles that have historically affected renewables projects and supports long-term planning and growth of the energy industry“One year since the passage of the Inflation Reduction Act,were witnessing a

68、major trend towards US onshoring,both in solar and energy storage manufacturing.”Andy Klump,CEO,Founder,Clean Energy Associates(Aug 23)Source:Refer to Pg.87 10Furthermore,the Clean Energy for America act has extended tax credits for energy storage,including standalone storage units,through 2032,enco

69、uraging investment in a variety of storage technologies crucial for the stability and efficiency of renewable energy systemsNear-Term Impacts on Energy Storage ProjectsThe IRAs near-term impacts on energy storage projects are expected to reshape the energy landscapeStandalone Utilities:The act provi

70、des substantial economic incentives for sites that connect to grid networks,accelerating the development of grid-connected energy storage projectsStandalone Distributed Generation:Standalone storage systems are eligible for a 30%investment tax credit(ITC)and up to 70%with additional incentives1.Flex

71、ible placement of standalone Battery Energy Storage Systems(BESSs)can promote commercial development at sites with inadequate access to larger energy grids,expanding the reach of energy storage projectsStorage Technologies:The tax credit provisions for standalone energy storage will increase researc

72、h and development efforts,leading to the deployment of more diverse and advanced battery technologies by manufacturersFinancing:Smaller banks and lending organizations are likely to be incentivized for offering funds to smaller energy companies in order to support the construction and development of

73、 smaller energy storage systems,fostering increased investment in the energy storage sectorEnergy Transition Spotlight(Cont.)The US government is also promoting apprenticeships as a means to expand the skilled workforce.Construction projects supported by the IRA allocate a portion of labor hours to

74、qualified apprentices,providing valuable on-the-job training and meeting demand for skilled laborWhat is Friendshoring?What is Friendshoring?Friendshoring refers to prioritizing partnerships and investments within the country or with allied nations for mining,critical mineral processing,and energy-i

75、ntensive manufacturingIn tandem with government initiatives,manufacturers are undertaking additional measures to navigate the challenges that plague onshoring renewable energy productionGovernment and Industry Approaches to Chart a Resilient PathThe US government is adopting a multifaceted approach

76、to mitigate the challenges associated with onshoring operations in the countryThe US is forging partnerships with countries such as Japan and South Korea to bolster battery mineral and material processing capacities.These collaborations significantly contribute to global cathode(battery)material pro

77、duction by providing raw materials from non-Chinese suppliers.Companies procuring rare earth minerals from these suppliers are eligible for IRA tax credits,thereby reducing reliance on China.As a result of this strategy,major investments in new battery factories in the US have been made by companies

78、 such as Panasonic Holdings,General Motors,Honda Motor,and LG ChemSource:Refer to Pg.87 11Energy Transition Spotlight(Cont.)The Acts clean energy and climate tax incentives also require firms to adhere to stringent labor standards,including the payment of prevailing wages to laborers and mechanics.A

79、dditionally,there has been an optimization in cost of labor in the US driven by automation and technologies like AI,machine learning,IoT enhancing productivity and robots aiding workers in production.The use of these advanced technologies has enhanced productivity and efficiency,contributing to the

80、resurgence of domestic productionCombined with government initiatives that promote renewable energy production and incentivize companies to expand their production capabilities,these efforts represent a significant advancement in reshoring production to the US.As companies pivot towards onshoring pr

81、oduction,the optimization of transportation costs emerges as a critical factor,fortifying supply chain resilience and supporting domestic manufacturing initiatives in the USEnhanced Production of Solar,Wind,and Battery Storage Through Government InitiativesBy the third quarter of 2023,$100 billion o

82、f the government investments in solar,wind,and hydrogen energy and energy storage had materialized,alongside an$82 billion investment in distributed renewables and heat pumps1Utilization of IRA Tax CreditsThe IRA has propelled the revival of domestic manufacturing of clean energy as producers shift

83、to reshoring to capitalize on IRA tax credits,leading to significant investments exceeding$91 billion in over 200 solar,wind,energy storage,and hydrogen projects1.This shift toward domestic production aims to shorten supply chains,enhance supply chain transparency and resilience,and reduce emissions

84、Sector-Specific Impacts of Government InitiativesSolar Energy:The solar energy sector has witnessed the most substantial impact,with$92 billion in announced utility-scale solar power funding and$52 billion in actual investments across 38 states1.The implementation of the IRA has spurred a record sta

85、ndalone capacity addition of 72 GW,underscoring the acts immediate effect on solar deployment1.In June 2022,independent power producers Clearway Energy Group,the AES Corporation,Cypress Creek Renewables,and D.E.Shaw Renewable Investments(DESRI)formed the US Solar Buyer Consortium to support the expa

86、nsion of the domestic solar supply chain and drive the growth of the solar industry in the US.The consortium encourages a stable,domestic supply chain for solar modules,thereby promoting the onshoring of productionWind Energy:The advanced manufacturing production tax credits offered under the IRA ar

87、e expected to slash the costs of offshore wind blades by 27%and steel towers by 18%2.Since the introduction of the IRA,there has been a significant 60%increase in the projections for land-based wind energy installations for 2026,rising from around 11,500 MW to 18,000 MW,propelled by the incentives p

88、rovided under the Act3.Moreover,investments in the offshore wind sector in the US more than tripled to$9.8 billion in 2022 as compared with 2021,post the announcement of IRA4The Supply Chain Resilience of OnshoringBy relocating production back to the US,companies have effectively reduced transportat

89、ion and inventory holding costs.This strategic move not only bolsters the resilience of supply chains but also mitigates reliance on international shipping routes and foreign suppliers,which are vulnerable to geopolitical tensions and trade disputes.Source:Refer to Pg.87 12Energy Transition Spotligh

90、t(Cont.)As the renewable energy sector witnesses a notable surge in investments and manufacturing capabilities for solar and wind power,a significant uptick in investments in battery storage is expected to follow suitBattery Storage:The US saw a remarkable 51%increase in investment in battery storag

91、e in 2023 as compared with 2022,driven by the IRAs extension of tax credits for standalone storage units till 20321.This extension aims to foster the development of diverse storage technologies crucial for the stability of renewable energy systemsThe Rise in EV and Battery Storage GigafactoriesThe I

92、RA has encouraged over$70 billion investments towards EV and battery supply chains2 and reshaped the US battery cost curve with the price of lithium-ion battery packs at a record low of$139/kWh in 2023,a 14%drop from 20223.This increase in investment and decrease in battery prices has significantly

93、boosted EV sales in the USIn the first quarter of 2023,over 320,000 EVs were sold in the US,reflecting a 60%year-on-year growth2.This increase has been driven by the announcement of consumer tax credits of up to$4,000 for used clean vehicles and up to$7,500 for new clean vehicles under the IRA2Furth

94、er,the mounting pressure to reduce carbon footprints by the logistics and transportation firms across the US has resulted in increasing investments in sustainable solutions such as EVs and biofuels.Forecasts suggest that EVs could capture up to 75%of the market share by 2040,ultimately reaching full

95、 dominance by 20504With increasing demand for EVs comes a rise in battery production,leading to heightened investments in the construction of new gigafactoriesThe planned capacity for gigafactories in the US till 2030,has surged from around 700 GWh in July 2022(prior to the IRA)to over 1.2 terawatt-

96、hours(TWh)as of July 20232The development of a gigafactory in the US requires a capex of$90 million/GWh,notably higher than Chinas$60 million/GWh 5However,the IRAs investment tax credit which can reach up to 30%when specific labor requirements are met has significantly reduced the capex gap between

97、the two countries 5.Fueling Tomorrow:US Clean Energy Gains Momentum and Manufacturing ExpansionAgainst a backdrop of geopolitical tensions and global disruptions,the governments proactive measures aim to foster onshoring in renewable energy manufacturing.These initiatives,designed to fortify domesti

98、c production,will play a pivotal role in achieving an 80%clean energy benchmark by 2030 and transitioning to a fully carbon-free electricity grid by 20356The IRA is expected to provide incentives amounting to$1.2 trillion by 2032,creating an exceptionally supportive regulatory framework for clean te

99、ch.The Act could stimulate investment opportunities of$2.9 trillion by 2032 and infrastructure investments of$11 trillion by 2050,thereby boosting the clean energy sector in the US4To increase solar energy production in the US,it is crucial to enhance the existing manufacturing capacity and fill cri

100、tical gaps in the supply chain,such as insufficient production of solar ingots,wafers and cells and limited availability of resources for solar specialty glassSource:Refer to Pg.87 13Energy Transition Spotlight(Cont.)Since the enactment of the IRA in August 2022,investments of over$13 billion and th

101、e construction of over 79 facilities have been announced,adding over 100 GW of planned solar manufacturing capacity,sufficient to power over 10%of households in the country annually1While the construction of facilities is underway,the US will continue to depend on imports to combat gaps in the suppl

102、y chain in the short run.Subsequently,in the medium to long term,the current policies will facilitate domestic production for the majority of solar and storage products that are being importedMeanwhile,wind power remains one of the fastest-growing and most cost-effective electricity sources in the U

103、S,poised for substantial growth.The supply chain for water-based wind is currently in the early development stages while that for land-based wind has already been developed.In 2022,with investments of$12 billion and the announcement of 20 new facilities for both land-and water-based production,wind

104、power contributed to 22%of the total new electricity capacity2,3.Such investments,which cover wind ports and vessels,coupled with government policies that facilitate strong and stable demand,will continue to support wind energy productionAdditionally,the need for energy storage in the US is expected

105、 to double by 2023 compared to 2023,leading to increased interest among developers,installers,and end users4.The demand for battery energy storage systems(BESS)is expected to increase in particular,with more than a six-fold rise from 18 GWh to 119 GWh by 20305.This demand will be propelled by expone

106、ntial growth in the EVs sales,which are expected to exceed 6 million units by 2030,with fully electric vehicles accounting for more than two-thirds of these sales.By 2050,battery electric vehicles(BEVs)and plug-in hybrid electric vehicles(PHEVs)will make up 13-29%of new light-duty vehicle sales and

107、11-26%of on-road light-duty vehicles in the US6Since the IRAs implementation,19 facilities(including new construction and expansion)supporting utility-scale battery storage with almost$13 billion in new investment have been announced3.The projects that are expected to be implemented in 2024 could bo

108、ost battery manufacturing capacity nearly eightfold,potentially increasing the US share of global capacity from 4%in 2022 to 15%by the end of 20307US Moving Towards a Self-Reliant FutureBy 2030,the IRA is expected to drive the installation of 950 million solar panels,120,000 wind turbines,and 2,300

109、grid-scale battery facilities8.The incentives offered by the Act could ensure that domestic manufacturers meet the majority of the countrys demand for clean electricity.Annual solar PV cell and module production capacities could meet over 50%of potential 2030 demand,from meeting less than 25%of the

110、current demand9.Furthermore,onshoring will continue to strengthen the renewable energy supply chain by reducing reliance on foreign suppliers and helping the US mitigate the risks associated with trade disputes and global disruptions.By 2032,renewable energy is anticipated to constitute 45%of the to

111、tal energy generated in the US a significant surge from its 16%share in 202210.This self-reliance will not only help the country meet its renewable energy needs but will also accelerate economic growth“Market demand keeps growing for longer-duration and safer batteries and this is paired with the de

112、ployment of solar energy and other power sources for an ever-wider variety of applications.One year since the passage of the Inflation Reduction Act,were witnessing a major trend towards U.S.onshoring,both in solar and energy storage manufacturing.”Andy Klump,CEO and Founder,Clean Energy Associates(

113、Aug 23)Source:Refer to Pg.87 14Section IIMacroeconomic Indicators and Industry Insights15Macroeconomic IndicatorsReal GDP Growth in the US1Since the second quarter of 2022,sustained GDP growth signals expansion across various sectors,notably in energy.The adoption of clean energy technologies stands

114、 out as a significant driver of economic expansion.Notably,robust investments in clean energy manufacturing infrastructure are bolstering GDP growth3$20.42$20.58$20.82$20.95$20.67$19.03$20.51$20.72$20.99$21.31$21.48$21.85$21.74$21.71$21.85$21.99$22.11$22.23$22.49-10%-5%0%5%10%$16$18$20$22$24Q1 19Q2

115、19Q3 19Q4 19Q1 20Q2 20Q3 20Q4 20Q1 21Q2 21Q3 21Q4 21Q1 22Q2 22Q3 22Q4 22Q1 23Q2 23Q3 23GDP($Tn)Growth(%)Employment Rate:Renewable Energy Industries in the US2In 2020,employment in solar power declined while wind energy and battery storage experienced modest growth,fueled by increased installations a

116、nd expiring tax credits.Solar faced challenges like supply chain disruptions and a shift towards larger projects.Since then,all three sectors have steadily expanded employment,with solar emerging as the frontrunner in growth111.2134.4335375.662.978.8201820192020202120222023WindSolarBattery Storage15

117、Source:Refer to Pg.87 16Macroeconomic Indicators(Cont.)Clean Energy Indices1Clean energy indices have seen differing trends.The S&P Global Clean Energy Index,reflecting performance of global clean energy companies,slightly declined in the last three years.In contrast,the NASDAQ OMX Clean Energy Focu

118、sed US Index,centered on performance of US-based firms in clean energy,has risen modestly since late 2022.This growth is driven by rising renewable energy demand,increased investment,and policies like the IRA and IIJAUS Industrial Production:Utilities:Renewables and Other Electric Power Generation2T

119、he US Renewable Utility Production Index,benchmarked since 2017,accelerated notably post-IRA implementation in 2022.This signals a shift towards advanced grid infrastructure with cost-effective renewables like solar and wind.Projections by the US Energy Information Administration(EIA)foresee a signi

120、ficant surge in renewable energy production by 2025,with renewables reaching 42%of the electricity mix by 2050,up from 21%in 20201,946.3 1,985.5 2,048.8 1,962.3 2,073.5 2,269.4 2,246.1 2,267.9 2,248.4 2,166.8 2,432.8 2,667.4 3,178.3 3,275.6 3,410.4 3,527.0 3,277.2 2,924.3 3,003.0 3,032.0 3,164.0 3,1

121、80.8 3,351.4 3,082.4 3,236.0 607.4 609.8 561.2 543.1 603.7 648.8 696.5 702.0 760.2 717.4 995.4 1,431.0 1,787.5 1,452.5 1,452.6 1,463.3 1,247.0 1,244.8 1,362.9 1,259.3 1,266.7 1,198.3 1,070.6 895.8 917.0 01,0002,0003,0004,000Q1 18Q2 18Q3 18Q4 18Q1 19Q2 19Q3 19Q4 19Q1 20Q2 20Q3 20Q4 20Q1 21Q2 21Q3 21Q

122、4 21Q1 22Q2 22Q3 22Q4 22Q1 23Q2 23Q3 23Q4 23Q1 24*Nasdaq OMX Clean Energy Focused US S&P Global Clean Energy Index11412096101111123113115128141119136146159137157180197150169187180161050100150200Q1 18Q2 18Q3 18Q4 18Q1 19Q2 19Q3 19Q4 19Q1 20Q2 20Q3 20Q4 20Q1 21Q2 21Q3 21Q4 21Q1 22Q2 22Q3 22Q4 22Q1 23Q

123、2 23Q3 2316Source:Refer to Pg.87PPA Price Index1,2Macroeconomic Indicators(Cont.)17Note:*In the renewable energy sector,a Power Purchase Agreement(PPA)is a contract where a buyer agrees to purchase electricity from a renewable energy producer at a predetermined price over a specified periodSince 202

124、0,there has been a notable increase in the prices of renewable energy power-purchase agreements(PPAs)*due to rising energy prices.In 2022,prices of solar and wind energy increased nearly 10%quarter-on-quarter in Q322 with a 34%increase year-on-year.These price escalations have been attributed to a v

125、ariety of factors,including inflation,elevated interest rates,rising labor costs,supply chain constraints,and heightened demand for clean energyIn spite of these pricing difficulties,the solar and wind energy industry is expected to grow in the future due to an anticipated decline in technology cost

126、s,driven by shrinking inflation and sustained support from IRA tax incentives.Moreover,an increased focus on ESG has led to ongoing advancements in wind,solar,and battery technologies,which bolster the competitiveness of these energy sources against fossil fuels.These advancements signal a significa

127、nt shift toward a more sustainable energy landscape,presenting promising opportunities for stakeholders within the renewable energy sector23.024.225.728.330.930.636.443.349.851.157.560.028.927.527.826.929.031.432.436.442.449.451.152.6015304560Q3 18Q4 18Q1 19Q2 19Q3 19Q4 19Q1 20Q2 20Q3 20Q4 20Q1 21Q2

128、 21Q3 21Q4 21Q1 22Q2 22Q3 22Q4 22Q1 23Q2 23Q3 23Q4 23WindSolarNorth American PPA Price Index($/MWh)17Source:Refer to Pg.87 828909.1 998.2 10961,203.5 1,321.4 1,450.1 1,593.1 1,749.3 202320242025202620272028202920302031North America Energy Transition Market Size(in B)18Energy Transition Industry Insi

129、ghtsNorth America Energy Transition InsightsEnergy transition market is expected to grow at a CAGR of 9.8%from$828 billion in 2023 to$1,749 billion by 2031Energy transition refers to the shift from fossil-based energy production systems like natural gas,oil,and coal towards renewable energy sources

130、such as solar,wind and lithium-ion batteriesAchieving a significant transition to clean energy and implementing widespread climate solutions in the US will necessitate approximately$27 trillion in capital expenditure by the year 20503By 2050,with an almost completely decarbonized power grid,the foss

131、il share in final energy demand is expected to be close to 44%,driven by electrification of all major demand segments4ForecastSectorGrowth StageLeadersRenewable EnergyMidElectric VehiclesMidRenewable FuelsLowCarbon Capture storage/utilization(CCS/CCU)LowHydrogenLowNorth Americas Energy Transition by

132、 Sector and LeadersNote:The total energy transition market figures may not match the figures in the covered sub-sectors(Renewables,Wind,Solar and Battery Storage)Source:Refer to Pg.87 19Energy Transition Industry Insights(Cont.)US Energy Transition Market DriversNumerous projects initially scheduled

133、 for early 2023 faced delays,partly due to supply chain hurdles.A significant challenge persists in obtaining transformers necessary for integrating clean energy into the grid.According to a renewable energy developer,delivery times for transformers and associated equipment have extended from 50 wee

134、ks to 150 weeks by the end of 2023Wood Mackenzie estimates that only about 20%of US transformer demand can be fulfilled domestically,with lead times for critical transformers ranging from 80 to 210 weeks4The swift escalation in interest rates,driven by actions from the Federal Reserve,has notably in

135、flated capital costs across all energy ventures.Clean energy initiatives are particularly sensitive to these rate hikes due to their significant initial investment requirementsIn the third quarter of 2023,Solar PPA rates surged by 21%compared to the previous year,wind PPA rates increased by 16%,and

136、blended PPA rates climbed by 18%3The absence of adequate transmission infrastructure stands as a significant barrier to the advancement of clean energy transition and jeopardizes reliability,especially in regions vulnerable to frequent extreme weather eventsChallenges persist in obtaining approvals

137、across state borders and determining equitable cost distribution for interregional transmission projectsThe development of US transmission lines takes 101 or more years to complete due to lengthy permitting processUS Energy Transition Market ChallengesSupply Chain ChallengesHigh Interest Rates on Cl

138、ean Energy ContractsLack of Transmission InfrastructureThe US is driving its clean energy transition through major legislation and incentives,targeting net-zero emissions by 2050Key policies like the IIJA,CHIPS and Science Act,and IRA aim to make clean energy technologies economically competitive wi

139、th fossil fuels.These measures offer long-term policy certaintyThe electrification of the transport sector is gaining momentum as companies invest heavily in EVs and is expected to witness the most prominent changes during the energy transitionOver the next thirty years,approximately 55 billion barr

140、els of oil will be phased out from North American roads,equivalent to roughly a decades worth of current road transport oil consumptionThe projected 26.4 million EVs will make up nearly 10%of the 259 million light-duty vehicles expected to be on US roads in 20302Investment in energy transition,vital

141、 for combating climate change,is escalating in North America.Funds(federal and private)are pouring into renewable sources like solar,wind,and hydroelectric powerIn 2023,the US emerged as the worlds second-largest investor in the energy transition,with investments increasing by 22%y-o-y to reach$303

142、billion,equivalent to 1.3%of the years estimated GDP1Legislative InitiativesElectrification of Transportation SectorIncreasing Investment in Energy TransitionSource:Refer to Pg.87 33.5%38.5%39.2%37.3%39.2%38.3%37.0%27.9%22.2%19.7%22.1%19.7%17.6%17.2%20.1%20.5%20.4%19.9%18.7%19.7%19.5%7.2%7.5%8.4%9.0

143、%10.2%10.8%11.6%1.5%2.0%3.1%3.0%3.8%5.0%6.1%9.8%9.4%9.2%8.7%8.4%8.5%8.6%3,8283,8013,6843,7743,9183,8643,9092018201920202021202220232024Natural GasCoalNuclearWindSolarOther20Energy Transition in US Power GenerationShifting Dynamics in Electricity Generation1The US energy sector is undergoing a signif

144、icant transformation,characterized by a shift towards renewable sources and a departure from conventional fossil fuels.Government initiatives,including tax credits and subsidies provided by the IRA,along with provisions under the IIJA,are playing a crucial role in driving growth within the industryT

145、he increase in solar and wind power generation,fueled by domestic production,is resulting in a decline in coal and natural gas-fired electricity generation a trend expected to persist beyond 2023Solar and wind energy are expected to account for 18%of the total electricity generation in 2024,reflecti

146、ng an increase from 8%in 2018.Consecutively,the share of coal is expected decrease from 27.9%in 2018 to 17.2%in 2024The majority of solar capacity expansion is concentrated in states such as Texas and California,which have historically relied on natural gas for electricity generationUS Annual Power

147、Generation by Source(in B/KWh)ForecastSource:Refer to Pg.87 2121The RD&D budget for renewable energy and storage technology has been on the rise since 2018,indicating a commitment to investment in the renewable sectors.Conversely,the RD&D budget for fossil fuels has declined,signaling waning interes

148、t in themThis RD&D budget trend highlights a shift toward clean energy initiatives in the US,which not only garners significant government backing but also attracts interest from investorsFurthermore,by prioritizing the advancement of domestic clean energy technologies,the US is actively decreasing

149、its reliance on energy imports and improving energy security597.5 576.3 678.6 667.0 670.1 691.2 409.4 866.3 794.8 870.6 1,051.7 1,080.3 1,111.7 1,059.1 205.6 240.8 147.3 394.7 474.3 448.0 490.8 02004006008001,0001,2002016201720182019202020212022RD&D Budget(in mm)1 Fossil fuelsRenewableenergysourcesO

150、ther powerand storagetechnologiesThe US Department of Energy(DOE)allocates funds for clean energy research and development through its Solar Energy Technologies Office(SETO)2,Wind Energy Technologies Office(WETO)3,and the Advanced Manufacturing Office.This funding supports projects in the following

151、key research domains:Solar:Photovoltaics(PV),concentrating solar-thermal power(CSP),systems integration(SI),soft costs(SC),manufacturing and competitiveness(M&C),and solar workforce development(WF)Wind:Atmosphere to electrons,distributed wind,environmental impacts and siting of wind projects,grid in

152、tegration,next-generation wind technology,offshore wind,resource assessment and characterization,testing and certification,wind manufacturing and supply chain,wind turbine radar interference,wind turbine sustainability,and workforce development and educationResearch,Development,and Demonstration(RD&

153、D)Budget for Energy TransitionSource:Refer to Pg.87 22Energy Transition Import and Export Dynamics USThe import and export of renewable energy sources by the US have fluctuated significantly over the past few years.Recent trends indicate a narrowing gap between imports and exports,reflecting an evol

154、ution in trade dynamics within the sector.In 2021,the US faced challenges in renewable energy imports due to disruptions in the supply chain and regulatory constraints,especially due to the anti-China legislation.However,the enactment of the IRA in 2022 acted as a catalyst,stimulating both exports a

155、nd imports of renewable energy componentsUS Import and Export Scenario13.763.633.504.276.525.8910.3414.7611.7515.200510152020182019202020212022Import v/s Export of Renewables*in the US(in B)1ExportImportThe wind energy sector,although encountering supply chain hurdles,finds renewed optimism with var

156、ious government initiatives.This act promotes domestic manufacturing of components such as turbine towers and nacelles.This shift to domestic manufacturing,evidenced by a decline in wind imports from$5.12 billion in 2020 to$2.38 billion in 2022 and a surge in exports from$32.46 million in 2021 to$50

157、.2 million in 2022,highlights an increasing self-reliance in the sectorImport-Export Trajectory in the Wind and Solar Energy Sectors1 The growth trajectory of battery storage mirrors that of renewable energy adoption.Battery storage capacity in the US has steadily increased since 2021 and is expecte

158、d to surpass 30 GW by 2024,outpacing non-renewable counterparts such as petroleum,etc.Despite this growth,the US remains reliant on imports for the production of Li-ion batteries,with crucial components entirely sourced from other countries.However,planned cell production initiatives aim to elevate

159、the USs global share from 4%in 2022 to 15%by 2030,challenging Chinas dominance and fostering greater self-sufficiencyTrade Dynamics in the Battery Storage Sector117.4317.0714.7018.9221.6613.4413.5012.9320.8132.840204020182019202020212022Battery Storage Supply Chain:Import v/s Export(in B)ExportImpor

160、tConversely,solar energy imports are influenced by geopolitical dynamics.The imposition of legislative measures such as the Uyghur Forced Labor Prevention Act initially subdued solar imports from$8.54 billion in 2020 to$7.19 billion in 2021.However,strategic tariff waivers on PV cells and modules fr

161、om Cambodia,Malaysia,Thailand,and Vietnam have revitalized imports,which reached$10.68 billion in 2022.The PV module capacity in the US is expected to more than triple in 2024,marking a significant shift from previous import dependence on ChinaNote:*Renewables Include solar,wind,biofuel and hydroele

162、ctricSource:Refer to Pg.87 23Energy Transition Workforce TrendsWorkforce in the Renewable Energy Sector in the US The workforce in the renewable energy industry in the US is undergoing significant expansion owing to increased demand and substantial investments,notably since the introduction of the I

163、RAJobs in the renewable energy industry have increased in all the states in the US,with a national increase of 3.9%from 2021 to 2022 outpacing the 3.8%growth in employment in the overall energy industry.In 2022,there were 3.3 million jobs in the clean energy sector,with the energy efficiency space a

164、ccounting for the highest number of jobs(2.2 million)During 2022-2032,wind turbine service technicians and solar PV installers are expected to be among the fastest-growing occupations,with growth rates of 45%and 22%,respectively,before the expiration of IRA provisionsGrowth in Employment across Segm

165、ents and StatesDuring 202122,employment within the battery electric vehicles segment witnessed a 27%growth,surpassing employment in the gasoline and diesel segment by 17 times.Overall,the clean vehicle segment accounted for 59%of all new jobs created in the motor vehicle industryJobs in the solar an

166、d wind energy segments accounted for 22,279(nearly 87%)of the net new electric power generation jobs in 2022,reflecting a 3.6%increase as compared with 2021Further,the states with the highest clean energy jobs in 2022 were California(623,972),Texas(396,071)and New York(230,119)Additionally,the state

167、s with the most growth in clean energy jobs from 2021 to 2022 was West Virginia(19.3%),New Mexico(9.1%)and Oklahoma(9.0%)While other states also experienced positive growth,Vermont(0.6%)and Wisconsin(0.6%)witnessed least amount of growth68%16%11%5%Energy EfficiencyRenewable GenerationClean VehiclesS

168、torage&GridShare of Jobs in the US Clean Energy Sector(2022)1Source:Refer to Pg.87 24Energy Transition Workforce Trends(Cont.)Recruitment Challenges in the Renewable Energy IndustryOne of the primary challenges faced by the energy sector during its transition to renewable energy is the recruitment o

169、f skilled workersElectric power generation(EPG)includes a wide variety of activities related to generating electricity,including the construction,maintenance,operation,and decommissioning of power plants and renewable energy projectsAmong the wide variety of activities under electric power generatio

170、n,construction activity faced significant challenges while hiring solar energy workers(52%of companies)and wind energy workers(60%of companies),primarily due to limited applicant pool and insufficient experience,training or technical skills52%50%28%28%20%33%60%025%040%50%ConstructionUtilitiesWholesa

171、leTradeManufacturingProfessional andBusiness ServicesOtherServicesPercentage*of Companies Encountering Difficulty in Hiring for Solar and Wind Electric Power Generation by Activity(2022)1SolarWindAddressing Workforce Challenges through Strategic InitiativesIn response to the evolving clean energy la

172、ndscape,the US government is implementing policies and initiatives for workforce development.The US Treasury is expected to issue definitive instructions on wage standards and apprenticeship mandates in 2024,thereby increasing the employment of apprentices in the renewable energy sector to alleviate

173、 labor shortagesRenewable energy developers and utilities are expected to secure increased funding from initiatives such as the IIJA and IRA,aimed at fostering the development of a skilled workforce in the green energy sectorFurthermore,institutes such as the Yale School of the Environment are launc

174、hing certification programs tailored to train professionals in green skills,bridge the green skills gap,and facilitate rapid application of expertise within clean energy companiesAdditionally,the integration of generative AI is significantly reshaping workforce demands in the renewable energy sector

175、,particularly in solar and wind electric power generation,which include five of the top ten occupations demanding AI skills.The integration of AI is aimed at automating the most arduous tasks in the industry such as inspection of turbines which can be done using AI dronesNote:*Percentages represent

176、the companies surveyed under the US EER Report 2023 EditionSource:Refer to Pg.8725Energy Transition Workforce Trends(Cont.)Outlook for Onshoring and ReshoringThe outlook for onshoring and reshoring in the renewable energy sector in the US appears promising due to robust policy incentives and a growi

177、ng recognition of the advantages of domestic production.However,companies may initially face challenges and require increased investments as they navigate this transitionImpact of Federal PoliciesThe implementation of federal policies such as the IRA and the BIL,which support onshoring and reshoring

178、,could generate an additional of 1.4 million jobs by 2035 compared to RS,where these laws are absentJob Projections by 2035The Advanced Tax Credit(ATC),Net Zero(NZ),and reference scenarios anticipate the creation of additional 2.5 million,4 million,and 1 million net jobs,respectively,by 2035The NZ s

179、cenario shows the highest increase in jobs,particularly in renewable energy sectors such as utility solar,onshore wind,and storage,accompanied by a decline in jobs in the coal and nuclear generation sectors.Notably,the coal industry is projected to have zero jobs by 2035 across all scenarios,indicat

180、ing a clear shift away from this non-renewable energy sourceOutlook-Growth of Jobs in the US Electricity Sector Under Different Emissions Scenarios1The Advanced Tax Credit(ATC)scenario involves tax credits for various low-carbon technologies(similar to the IRA)as well as increased investment in clim

181、ate-friendly infrastructure(akin to the BIL).Building upon the ATC scenario,the Net Zero(NZ)scenario introduces sector-specific performance standards and an economy-wide cap on net-zero emissions,crucial for achieving the US goal of net-zero emissions by 2050.Lastly,the Reference Scenario(RS)include

182、s federal and state-level climate policies as of May 21395.3100.70187.7334.4181.7307.41,877.3111.8496.6616.5108.1464.6496.40292.51,908.7124.1496.91,499.4108.11,056.8447.60272.21,974.6126.4496.62,548.9110.81,423.0494.80272.02,057.8130.701,0002,0003,000DistributedSolar PVUtility solarOffshore WindOnsh

183、ore WindNatural GasCoalNuclearTransmission&DistributionStorageComparative Job Growth Scenarios(in 000s)20202035-Reference Scenario2035-Advanced Tax Credit Scenario2035-Net Zero ScenarioSource:Refer to Pg.88 Navigating Energy Transition Supply Chain ChallengesThe transition toward renewable energy is

184、 encountering unprecedented challenges amid global supply chain disruptions.Even with the effective planning,implementation,and resource management that previously drove its expansion,present indications point to a deceleration in its growthGlobally,the renewable energy sector faces mounting pressur

185、e due to the escalating costs of raw materials.Factors such as inflation and elevated competition for raw materials have reversed the previous downward trend in prices,rendering clean energy transitions more challenging and costly.Additionally,suppliers and contractors struggle with prolonged lead t

186、imes for essential equipment delivery owing to capacity constraints and a shortage of skilled labor,as well as increased project insurance costs due to high project values.Geopolitical tensions in key production regions have further exacerbated the situation,with the conflict in Ukraine disrupting t

187、he availability of vital lithium supplies.There is also uncertainty surrounding mineral sourcing from other conflict-prone countries such as the Democratic Republic of Congo and PeruCurrent Global Supply Chain Challenges Renewable energy enterprises in the US face unique supply chain challenges.Crit

188、ical materials and components,primarily sourced from a handful of nations,often fail to meet the stringent standards for human rights and environmental sustainabilityUnique Challenges Faced by the Renewable Energy Sector in the USThe intricate process of renewable energy product creation,which invol

189、ves interconnected global processes from material procurement to shipping emphasizes the vulnerability of supply chains in this sector,particularly highlighted by global occurrences such as the COVID-19 pandemicIn response to these vulnerabilities,the US government,under the leadership of President

190、Joe Biden,has launched initiatives aimed at enhancing supply chain resilience within the renewable energy sector.Central to these efforts is the establishment of the Council on Supply Chain Resilience,tasked with coordinating strategic responses to supply chain disruptions.Additionally,the governmen

191、t is allocating grant funding to communities to compensate for the coal mine closures,aiding the production of essential renewable energy materialsThe Energy Department is allocating resources for the production of critical materials and the development of the circular clean energy supply chain,ther

192、eby strengthening domestic manufacturing capabilities and aligning with clean energy objectives.Complementing these actions,the Commerce Department has established a dedicated supply chain center aimed at addressing clean energy supply chain considerations through the development of an assessment to

193、ol to help assess the potential for trade disruptions of select critical minerals and materialsUS Governments Measures to Address Challenges in the Renewable Energy Sector“Before the pandemic,supply chains werent something most Americans thought about or talked about,but today,after years of delay i

194、n parts and products,everyone knows why supply chains are so important.”Joe Biden,President,United States of America(Nov 23)26Texas and California Dominate Clean Power Capacity27Note:*Advanced development projects are projects that not under construction and already have a PPA or firm equipment orde

195、r or are moving forward with plans to be placed under utility ownership59,568 MW54%19%15%12%85,977 MWClean Power Projects Pipeline in the US(in MW)1Advanced PipelineNon Advanced PipelineAdvanced SolarAdvanced Offshore windAdvanced Battery StorageAdvanced Land Based Wind9,6179,0968,1156,4405,2253,838

196、3,7902,91002,0004,0006,0008,00010,000TexasCaliforniaNew YorkVirginiaIndianaArizonaNew JerseyMassachusettsTop States by Clean Power Advanced Development Capacity(in MW)1As of Q323,the clean power pipeline in the US has a capacity of 145,545 MW,with 85,977 MW in advanced development*across 48 states1.

197、Alaska and Washington are the only states without any advanced clean energy projects,while Texas leads with a capacity of 9,617 MW,followed closely by California(9,096 MW)and New York(8,115 MW)1Solar projects constitute a majority(54%)of the total capacity within the advanced development pipeline,fo

198、llowed by offshore wind projects at 19%.Among states,New York has the largest offshore wind project pipeline1Battery storage projects account for 15%of the clean energy pipeline,with California taking the lead in this sector.Land-based wind projects represent the remaining 11%,with Wyoming having th

199、e highest land-based wind capacity1This data underscores the diverse opportunities present in the US clean power sector,emphasizing the importance of leveraging regional strengths and embracing various clean energy sectors to drive towards a sustainable futureSource:Refer to Pg.88 Hybrid Energy Syst

200、em LandscapeHybrid energy systems combine multiple energy sources and storage technologies to power generators,optimizing reliability and efficiency.In Q223,the operational hybrid capacity,encompassing fully operational projects and project phases in operation,reached 20,845 MW in the US1Over the pa

201、st decade,the solar+storage sector has witnessed remarkable growth and its capacity reached approximately 15,200 MW in Q223,accounting for 73%of the total operational hybrid capacity1Solar+storage projects have emerged as the predominant hybrid energy system type.In the first half of 2023,they exclu

202、sively comprised the hybrid projects brought in the pipeline,underscoring their dominance in the current energy landscapeThe Edwards&Sanborn Solar+Energy Storage facility in Kern County,California,achieved full operational status in Jan24,becoming the worlds largest solar+storage site.This facility

203、generates 875 MWdc of solar energy and boasts 3,287 MWh of energy storage capacity,with a total interconnection capacity of 1,300 MW 2Wind+storage,once the leading hybrid energy system type,now constitutes only 17%of the total operational hybrid capacity1Moreover,there are limited wind+solar+storage

204、 and wind+solar projects operating in the US,jointly representing 10%of the operational hybrid capacity as of 20231As of Q2 2023,the development pipeline includes hybrid projects with a capacity of 28,627 MW,with solar+storage and wind+storage accounting for 98%and 2%of these projects,respectively12

205、81,9972,1512,2432,6893,0614,6284,9455,4396,2109,03312,95919,29120,84505,00010,00015,00020,0002011201220132014201520162017201820192020202120222023 YTD(1H)Cumulative Operational Hybrid Capacity in the US(in MW)1 Solar+StorageWind+StorageWind+Solar+StorageWind+SolarSource:Refer to Pg.88 29Onshoring,Res

206、horing,and Nearshoring in the Clean Energy IndustryOnshoring,Reshoring,and Nearshoring in the Clean Energy Industry1,2 The US is witnessing a shift toward onshoring and nearshoring of clean energy production owing to several key factors,including government incentives,need for bolstered supply chain

207、 resilience,advancements in technology,and an increasing preference for domestically sourced energy due to societal and environmental reasonsGovernment initiatives such as the IRA are actively promoting onshoring endeavors.This legislation facilitates the provision of tax credits to incentivize the

208、manufacturing of clean energy components and the establishment of clean energy production facilities.Moreover,it extends additional credits for the utilization of domestically manufactured componentsAs a result of these and production tax credits,the US has the capability to provide solar and wind e

209、nergy at some of the most competitive prices globallyThis push for onshoring aligns with a broader preference for domestic production due to consumer expectations for dependable delivery timelines and pricing stability.Global supply chain challenges,exacerbated by the COVID-19 pandemic and geopoliti

210、cal tensions such as the Russia-Ukraine conflict,have further increased this inclinationA shortage of proficient workers adept at constructing,operating,and sustaining state-of-the-art manufacturing facilities poses a notable challenge to the onshoring of clean energy productionFurthermore,the limit

211、ed geographical dispersion of rare earth minerals and vital elements such as lithium and cobalt,which are primarily extracted and processed in a handful of countries,presents hurdles to onshoringChallenges to Onshoring/ReshoringFriend-Shoring Initiatives:The US is pursuing a strategy of friend-shori

212、ng,“which involves forging strategic alliances with countries such as Japan and South Korea to ensure access to critical minerals and processing capabilities.Prominent companies,including Panasonic Holdings,Honda Motor,and LG Chem,are injecting significant capital into new battery manufacturing faci

213、lities in the USInflux in State Investment:Some states,such as California,Texas and Florida,with their ambitious decarbonization goals,possess abundant renewable resources and favorable regulatory climates,are witnessing significant influxes of investmentCorporate Investments:Corporations are increa

214、singly adopting initiatives such as RE100,committing to procuring 100%of their energy from renewable sources by specific target years,typically by 2050 or soonerGovernment Support:The IRA and the Bipartisan Infrastructure Law(BIL)not only provide unparalleled investments in the transition to clean e

215、nergy but also offer significant economic benefits and directly stimulate job growth in the USStrategies in PipelineSource:Refer to Pg.88 108.8121.7136.1152.3175.9203.5235.4272.4315.1364.62021202220232024202520262027202820292030US Renewable Energy Market Size*(in B)1358.18394.5434.5477.5525.5578.263

216、6.2700.220222023202420252026202720282029US Renewable Energy Market Size*(in GW)2*The CAGR for the US renewable energy market from 2024 to 2030 has been sourced from a syndicated report.Additionally,figures for 2021 and 2022 were included in the report.To determine the figures for 2023 and 2024,we ha

217、ve extrapolated the growth rate observed in 2022;*The figures for 2022-23 are calculated using forecasted CAGRForecastEnergy Transition Sub-Sector Overview Renewable Energy30US Renewable Energy Market InsightsThe surge in alternate electricity capacity in the US has been propelling the renewable ene

218、rgy market.Increasing consumer awareness regarding pollution and climate change has also prompted a shift towards green energy sources,driving growth in the renewable energy marketThe declining costs of renewable energy technologies,particularly solar and wind,have made them increasingly competitive

219、 with conventional sources of energy.Technological advancements,economies of scale,and reductions in manufacturing costs have all contributed to this trend,making renewable energy a more attractive option for utilities,businesses,and consumersCost competitivenessRise in demand for alternative energy

220、The renewable energy market in the US,is expected to reach$152 billion in 2024,is on a remarkable growth trajectory.Growing at a robust CAGR of 15.7%from 2024 to 2030,it is anticipated to reach approximately$364 billion by 20301Parallelly,the projections for 2050 depict a compelling future,with rene

221、wable energy set to supply 42%of the nations electricity,more than doubling its 20%share in 2020 in the US electricity generation mix3The growth trajectory highlights the nations accelerating transition towards cleaner,more sustainable energy sources.Besides,the renewable energy sector in the US is

222、undergoing a pivotal transformation,shifting away from offshoring towards reshoring and near-shoring practicesThe growth is propelled by escalating demand for clean energy and substantial incentives,positioning renewable energy as the predominant source of electricity generation by the mid-2030sFore

223、castSource:Refer to Pg.88 There is a growing trend of the Government investing in renewable energy projectsThe Infrastructure Investment and Jobs Act(IIJA)and the Infrastructure Investment in Renewable Energy Act(IRA)have played a pivotal role in shaping the trend by facilitating investment in new o

224、r expanded programs,grants,and tax credits.These initiatives aim to expedite the deployment of established and emerging renewable energy technologiesUtility-scale solar projects have secured the largest share of these investments with announced investments totaling$92 billion and actual investments

225、amounting to$52 billion across 38 states1.Additionally,utility-scale storage projects have garnered the second-largest share with announced investments reaching$52 billion and actual investments standing at$22 billion1Energy Transition Sub-Sector Overview Renewable Energy(Cont.)31Strategic Trends Sh

226、aping US Renewable Energy Market52.823.528.21.439.631.91.250.7SolarStorageWindClean HydrogenAnnounced(Q2 23)Actual(Q3 22)The renewable energy production sector in the US is embracing cutting-edge technologies such as advanced photovoltaics,AI,big data analytics,distributed energy storage,and green h

227、ydrogenThese innovations are not only enhancing operational efficiency but also facilitating seamless integration into the grid,fostering the development of state-of-the-art renewable energy solutions that are tailored to meet evolving market demandsIncreased Federal Investments Decentralization of

228、Energy3 An emerging trend in the renewable energy sector is the decentralization of energy productionIt entails establishing manufacturing facilities closer to consumption pointsDistributed energy resources(DERs)such as solar panels,wind turbines,batteries,etc.are pivotal in this shift,offering bene

229、fits such as enhanced reliability and energy autonomyThe US DER market is expected to witness capital expenditures worth$68 billon every year from 2022 to 2027,driven by its potential to enhance energy security,mitigate transmission losses,and reduce carbon emissionsInnovation and Technological Adva

230、ncement Rising Corporate Interest in Renewable EnergyCorporations,led by environmental sustainability and corporate social responsibility goals,are prioritizing using renewable energy sources for their operationsFor example,industry leaders such as Intel have invested significantly in renewable ener

231、gy,including 18 solar plants and the installation of the largest wind micro-turbine array in the US2The growing focus of corporates on renewable energy is driving momentum towards onshoring initiatives in the renewable energy manufacturing sector in the US1234Total Investments*in Clean Energy Since

232、IIJA/IRA(in B)(Q3 22 Q2 23)Notes:*Total Investments include federal investments and private investmentsSource:Refer to Pg.88 Energy Transition Sub-Sector Overview Renewable Energy(Cont.)32Renewable Energy Investment Current Scenario and Future Projections1,2 Following the implementation of the IRA,i

233、nvestments in the energy sector have increased rapidly and are poised for further growth,driven by the increasing demand for renewable energy in the US and the favorable tax incentives provided by the Act.These investments focus on the renewable energy sector,particularly solar and wind energy.The f

234、ollowing are some of the notable investments made by energy companies in 2022-23:610181830302931122129243333323420242025202620272028202920302031US Additional Annual Total Investment Forecast in Solar and Wind Power Generation(in B)WindSolarThese investments underscore the industrys commitment to adv

235、ancing renewable energy technologies and expanding production capabilities,aligning with the broader strategic vision for future of sustainable energy$2.3 billion investment to establish a facility that will focus on manufacturing LFP batteries and have an annual output of 16 GWh$1.7 billion investm

236、ent to establish a semisolid lithium-ion battery manufacturing facilityInvestment exceeding$1 billion to establish a factory with an initial production capacity of 3 GW,expandable to 6 GW$1.1 billion investment to construct a solar module factory,initially targeting a manufacturing capacity of 3.5 G

237、WInvestment of$40 million to expand operations at its Windsor and Brighton factories in ColoradoInvestment of over$100 million in new construction at Assembly Hall for their offshore wind segment$50 million investment in its Schenectady facility,focusing on its onshore wind capacity$500 million inve

238、stment to construct a significant offshore nacelle manufacturing facilityEnergy Storage SolarWind32Source:Refer to Pg.88 34.038.944.551.058.567.277.288.8102.2117.7135.820222023202420252026202720282029203020312032121.6141.4164.2191.1222.6259.3302.1352.020222023202420252026202720282029Forecast*The fig

239、ures for 2022-23 are calculated using forecasted CAGR33Energy Transition Sub-Sector Overview SolarUS Solar Energy Market Size*(in GW)North America Solar Energy Market Size*(in B)The US solar energy market is booming and is estimated to be at 164.2 Gigawatt(GW)by the end of 2024 and reach 352 GW in f

240、ive years,registering a CAGR of over 16.48%during the forecast period(2024-2029)The solar energy sector in North America is projected to witness a CAGR of 14.8%,expanding from$34 billion in 2022 to$135.8 billion by 2032According to the report by the Solar Energy Industries Association(SEIA)and Wood

241、Mackenzie,solar energy accounted for 48%of all new electricity-generating capacity that was added to the US grid through the first three quarters of 2023The solar industry has experienced robust growth,with a staggering 24%annual increase since 2013,reaching a valuation of$36.3 billion in 2022.This

242、growth trajectory is poised to persist at a steady annual rate of 14%till 2028“The US solar industry is on a strong growth trajectory,with expectations of 55%growth this year and 10%growth in 2024.”Michelle Davis,Head of Solar Research,Wood MackenzieForecastSource:Refer to Pg.88 34Energy Transition

243、Sub-Sector Overview Solar(Cont.)Key PlayersUS Solar Energy Market Growth DriversImproved efficiency and reduced costSolar technology has undergone significant advancements in the past few years.Presently,various types of solar panels boast conversion efficiencies exceeding 20%.With further advanceme

244、nts in technology,efficiency is anticipated to continue climbing,with projections indicating a rise to approximately 29%by 2025Alongside efficiency gains,innovations in solar technology have led to notable cost reductions.The International Renewable Energy Agency(IRENA)predicts a 59%decrease in the

245、cost of electricity generated by solar photovoltaics(PV)by the year 2025Government renewable energy grantsGovernment entities at the federal,state,and local levels provide a range of incentives,including tax credits,rebates,and grants to encourage the adoption of solar energy.Moreover,renewable ener

246、gy regulations and requirements mandate utility companies to produce a specified portion of their power from renewable sources,including solar energyFor example,the Green Retrofit Grant allocates$250 million for residential solar projects.Additionally,the US Department of Energys Weatherization Assi

247、stance Program aids over 35,000 households annually in transitioning to cleaner and more efficient energy solutionsSource:Refer to Pg.88States Growing Interest in the Solar Energy IndustryDominance of Solar PV TechnologyEnergy Transition Sub-Sector Overview Solar(Cont.)351Solar Installations,by Stat

248、eTrends Shaping US Solar Energy Market1,2 The increased use of solar PV technology for electricity generation is a prominent trend in the solar energy market in the US.The SEIA has reported a 66%rise in utility-scale solar installations since Q1 2022,with further increase expected in 2024 and beyond

249、.The key factors driving solar PV technologies dominance includeCost Competitiveness:The cost of solar PV technology has decreased significantly in recent years,increasing its preference over conventional energy sources such as coal,natural gas,and nuclear powerEnvironmental Benefits:Solar PV cells

250、are clean and environmentally friendly energy sources as they generate electricity without emitting greenhouse gases or other harmful pollutantsPolicy Support:Federal,state,and local government policies and incentives,such as investment tax credits,renewable portfolio standards,net metering,and sola

251、r rebates,have helped drive the growth of the solar PV market in the US2The US solar market,long dominated by California,is seeing rapid expansion in other states like Texas,Florida,and New YorkHalf of US states now have over 1 GW of solar capacity,compared to just three states a decade agoWith grow

252、ing demand for solar,newer state markets are gaining ground nationallyCalifornia,historically the top solar market,was overtaken by Texas in 2021 but regained its position in 2022However,forecasts suggest a decline in Californias residential and commercial rooftop sectors from 2024 onwards.Consequen

253、tly,Texas is expected to lead annual solar installations in the US from 2024 to 2028,marking a significant shift in the market landscape100-500500-1,5001,500-40,00040,000+1006.17.114.210.61012.918.622.619.930.93437.338.140.242.82014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 20

254、28ResidentialNon-ResidentialUtilityColumn2Solar PV Installations in the US(in MWdc),by Segment(201428)TexasCaliforniaForecastSource:Refer to Pg.88 Corporates Investing in Solar Energy to Save Money36Energy Transition Sub-Sector Overview Solar(Cont.)3Trends Shaping US Solar Energy Market1,2According

255、to SEIAs yearly Solar Means Business report,prominent US-based corporations such as Meta,Amazon,Apple,Walmart,and Microsoft are rapidly expanding their investments in solar and renewable energyEven though the trend is noticeable across various industries,the technology sector particularly outshines

256、others for its swift adoption of clean powerBetween 2012 and 2022,there has been an average annual increase of 73%in the procurement of wind and solar energy by companiesThis surge in investment is driven by two motives to combat the impact of global warming and to capitalize on the declining cost o

257、f clean energyInstalled Solar Capacity of US Businesses(June 2022)CompanyInstalled Capacity(MW)CompanyInstalled Capacity(MW)3,588.06515.061,113.43342.00987.25302.51688.91300.67550.06300.00High cost of installation is a significant challenge for the US solar energy marketAs per Morning Consult survey

258、 in July 2023,about 3 in 5(62%)adults in the US who do not currently own solar panels said they dont have them because the panels are too expensive to installWhile the cost of solar panels has been decreasing steadily over the years,installation costs,including labor,permitting,and other soft costs,

259、have remained relatively highNet metering is a policy that allows solar panel owners to sell excess electricity back to the grid,typically at retail rates,thus offsetting the cost of their electricity billsHowever,in recent years,there have been debates and policy changes surrounding net metering in

260、 various statesIn Mar23,North Carolina revised its pricing structure by implementing tariffs aligned with customers electricity expenses,replacing previous ratesSeveral states,such as Colorado,Idaho,and Wisconsin,are considering similar adjustments,while proposed legislation in states like Florida a

261、nd Arkansas aims to modify their respective programsIn a notable move,California,known for its proactive stance on climate issues,significantly reduced its rates,a decision that came into effect in Apr 23These regulatory adjustments may hinder the development of new solar installations,further compl

262、icating the existing challengesUS Solar Energy Market ChallengesHigh Cost of Residential Solar InstallationNet Metering ChangesSource:Refer to Pg.88 Energy Transition Innovations Solar37Note:*The data is for heterostructure Si cells,excluding the more efficient multi-junction Si cells(too expensive

263、for mass-market use)and thin-film solar cells(a small fraction of the market).The efficiency of silicon cells has remained 26.7%since 2020Technological advancements in the solar energy sector in the US are making solar power more efficient,affordable,and accessible.These innovations,coupled with pol

264、icies supporting renewable energy development,are transforming the sector by enabling better integration into the grid,optimizing energy production,and enhancing overall system reliabilityPerovskite solar cells,which use perovskite-structured(crystal-structured)compounds that have exceptional light

265、absorption,high charge-carrier mobility,and long diffusion lengths,represent a groundbreaking advancement in solar technologyTraditionally,silicon has been the primary material used in most solar panels,but companies are now enhancing the efficiency of panels by layering perovskite on silicon to cre

266、ate tandem cells These tandems can potentially increase power output by 20%or more as compared with silicon cells alone as they capture different wavelengths of solar energy.With more energy absorbed per cell,the cost of solar electricity produced is lower Moreover,perovskite materials such as methy

267、lammonium lead halides are cheap to produce and relatively simple to manufactureThe efficiency of perovskite solar cells has increased from around 14%in 2013 to nearly 26%in 2023.Tandem cells have achieved efficiency levels surpassing 32%in 2023 up from less than 25%in 20184Perovskite-Silicon Tandem

268、sFloating solar plants,or floatovoltaics,are solar panel arrays installed on bodies of water such as ponds,reservoirs,and lakes,rather than on land In recent years,the US has witnessed a significant uptick in the adoption of floating solar technology,driven by a need for more sustainable and efficie

269、nt energy sources,coupled with the unique advantages of floatovoltaics over traditional solar farmsThe waters cooling effect ensures that solar panels operate more efficiently as compared with land-based installations,whose performance can be diminished by heatAlthough the initial cost of floatovolt

270、aics is approximately 1015%higher than that of conventional plants,they are expected to be cost-effective in the long run1.The following are the largest floating solar farms in the US2,3Floating Solar Farms“Floating solar technology creates new opportunities for underutilized bodies of water,allowin

271、g space that would otherwise sit vacant to enable large-scale renewable energy generation,which helps to bring the benefits of clean energy to even more customers.”Robert Pohlman,VP NJR Clean Energy Ventures(Jun 23)24.527.228.629.429.732.113.917.92022.222.523.124.225.325.525.725.72013201420152016201

272、7201820192020202120222023Efficiency of Different Types of Cells(in%)4Perovskitesilicon tandemStandalone perovskiteSilicon*Canoe Brook,New Jersey8.9 MWHealdsburg Floating Solar Farm,California4.8 MWSayreville Floating Solar Farm,New Jersey4.4 MWWindsor Floating Solar Farm,California1.8 MW37Source:Ref

273、er to Pg.88 8.09.310.812.614.717.119.923.227.0202220232024202520262027202820292030144.2152.6161.8171.5181.8192.7204.2216.5229.5243.2257.8273.3289.6307.02022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035Energy Transition Sub-Sector Overview WindUS Wind Energy Market Size(in GW)1 US

274、 Wind Energy Market Size(in B)2 38US Wind Energy Market Insights3In 2022,the wind sector in the US attracted$12 billion in investments with wind power capacity expanding by 8.5 GW,reaching a cumulative capacity of more than 144 GW.Projections indicate that by 2027,annual capacity expansions are expe

275、cted to fall within the range of 18.4 GW to 22.7 GWThe wind energy sector in the US is projected to witness a CAGR of 16%,expanding from$8 billion in 2022 to$27 billion by 2030Wind energy constitutes 11.5%of the total electricity generation capacity in the US,securing its position as the fourth-larg

276、est contributor to the nations electricity generation mix.Notably,in 2023,it added 22%to the countrys new electricity generating capacity,solidifying its status as the foremost renewable energy source in the US,surpassed only by solar energyAs of May 2023,the US offshore wind energy project developm

277、ent and operational pipeline has reached a capacity of 52,687 MW,including 20,978 MW and 24,596 MW capacity worth of projects under permitting and site control stages,respectivelyForecastForecastSource:Refer to Pg.8839Energy Transition Sub-Sector Overview Wind(Cont.)Key PlayersUS Wind Energy Market

278、Growth DriversFavorable Government PoliciesSeveral government initiatives targeting the advancement of renewable energy and the mitigation of greenhouse gas emissions have positively impacted the renewable energy market in the US In August 2022,Congress enacted the Inflation Reduction Act(IRA),exten

279、ding both the Production Tax Credit(PTC)and the Investment Tax Credit(ITC)for wind projects until 2024These measures have propelled the growth of the wind energy sector in the USReduced Cost of Wind EnergyAs per the American Wind Energy Association,expenses associated with wind power declined by 70%

280、from 2009 to 2021Typically,the prices for acquiring wind energy are established under long-term power purchase agreements,mitigating the risks associated with short-term fluctuations in wholesale power market pricesThe affordability of wind energy is driving its market growth in the USEnergy Transit

281、ion Sub-Sector Overview Wind(Cont.)40Trends in the US Wind Energy Market1,2The wind energy market in the US has witnessed notable growth accompanied by increased collaboration among diverse stakeholders.These collaborations typically entail partnerships between wind energy developers,technology prov

282、iders,utility companies,and government agencies aimed at expanding wind energy capacity and enhancing efficiencyIn June 2023,the White House joined forces with eleven governors from the East Coast to initiate the Federal-State Offshore Wind Implementation Partnership,which is geared towards expediti

283、ng the expansion of the offshore wind industryIn June 2023,rsted and Vestas,leading players in renewable energy,unveiled a strategic sustainability collaboration.As part of this partnership,rsted will source wind turbine towers and blades made from recycled materials,ensuring low-carbon steel,exclus

284、ively from Vestas for all collaborative offshore wind projectsThe increasing number of wind turbines across the US represents a notable trend spurred by a variety of factors,including advancements in wind turbine technology,decreasing costs associated with wind energy production,etc.These turbines a

285、re progressively becoming larger and more powerful,driving competitive pricing and accessibility due to economies of scale Between 2021 and 2022,the average capacity of newly installed wind turbines increased by 7%to reach 3.2 MW while the hub height(the distance from the ground to the center of the

286、 turbines rotor)grew by 4%to 98.1 metersThe maximum power rating or capacity of wind turbines has also witnessed an increase since the early 2000sIncreased Collaboration to Advance Offshore Wind Energy1Proliferation of Wind Turbines2Source:Refer to Pg.88 Energy Transition Sub-Sector Overview Wind(Co

287、nt.)41Challenges in the US Wind Energy Market1Location Specific ChallengesThe US intends to establish seven offshore wind farms to produce 30 GW of energy by 2030.However,identifying appropriate sites and overcoming technical obstacles are necessary for the advancement of the offshore wind energy in

288、dustryWind resource availability:The most fundamental factor in selecting a site for a wind farm is the availability of an area with high and consistent wind speeds for wind energy development to ensure the economic viability of projectsAccess to transmission infrastructure:Wind farms need to be con

289、nected to the electricity grid to deliver the generated power to consumers.Locating sites near existing transmission infrastructure can reduce the cost and complexity of grid connection.However,many of the best wind resources are located in remote areas,necessitating investment in new transmission l

290、inesSupply Chain ConstraintsDespite advancements in wind energy development,supply chain challenges persist in the US wind energy industry.These challenges are becoming more prominent as efforts to decarbonize the grid and create employment opportunities intensify.Wind turbine manufacturers have fac

291、ed significant setbacks in recent years:General Electric reduced its US-based workforce within its onshore wind unit by 20%in 2022 Siemens Energy disclosed significant quality issues at its wind turbine manufacturing subsidiary,Siemens Gamesa,potentially impacting up to 30%of globally installed turb

292、ines and posing further challenges to the offshore businessThe shortage of marine-grade welding capability exacerbates these supply chain issues,underscoring the urgent need for the US to mobilize a specialized workforce possessing the requisite skillset to effectively execute wind energy projectsSo

293、urce:Refer to Pg.88Energy Transition Innovations Wind42Wind energy companies in the US lead the global charge in developing crucial advancements and technologies for effective wind power utilization.Through continuous innovation and integration of advanced technologies,they aim to achieve long-term

294、sustainability goals while simultaneously reducing wind energy costs,supporting the shift away from fossil fuelsThe wind energy sector in the US is witnessing significant innovation,particularly the development of floating offshore wind farmsThe floating wind farms are designed to harness the abunda

295、nt offshore wind energy potential in the US,leveraging stronger and more consistent winds found in deeper waters.Their simpler installation process and increased efficiency as compared with fixed structures aid their growthTo bolster growth in the development of floating offshore wind farms,the US D

296、OE,through its Floating Offshore Wind Energy Shot initiative,plans to reduce the cost of floating offshore wind energy by over 70%to$45 per megawatt-hour by 20351Siemens Gamesa and rsted,both of which have operational offshore wind farms,are the key players driving progress in the offshore wind sect

297、or in the US.Additionally,companies such as Floventis Energy,Avangrid,and Equinor have offshore wind projects in their pipelineFloating Offshore WindAI-driven technologies are increasing efficiency and innovation across various processes in the wind energy sector:Advanced Weather Forecasting and Win

298、d Analysis:By leveraging AI capabilities,wind energy players can conduct precise real-time analysis of weather and wind conditions to minimize downtime,prevent equipment damage,and maximize operational efficiencyDevelopment of Optimized Maintenance Strategies:AI algorithms analyze historical mainten

299、ance data alongside environmental factors to accurately predict maintenance needs.This analysis facilitates optimized scheduling of maintenance tasks,ensuring minimal disruption of operationsTurbine Monitoring and Inspection:AI-powered tools enable continuous real-time monitoring of turbine performa

300、nce and automate inspection procedures.By swiftly detecting defects and ensuring adherence to safety standards,these tools enhance overall turbine efficiency and safetyWind Power Generation Forecasting and Scheduling:AI-driven forecasting models accurately predict wind power generation and energy de

301、mand,facilitating efficient energy dispatch and scheduling.This optimization leads to reduced operational costs and improved resource utilizationIndustry leaders such as the following are leveraging AI to optimize their operations:Use of Artificial Intelligence(AI)in Wind42Source:Refer to Pg.88 Grow

302、th of the Offshore Wind Sector in the US 43The offshore wind sector is witnessing rapid growth as energy producers are using ocean winds to generate electricity.The offshore wind projects offer distinct advantages such as allowing the construction of large-scale facilities near densely populated are

303、as without facing land-related constraints such as high real estate costs or population density conflictsIn Jan24,the first major offshore wind farm in the US began powering the New England grid,with one turbine operational at a capacity of 5 MW.Five more of the 62 total turbines are expected to bec

304、ome operational over the year,potentially increasing the countrys offshore wind capacity by 800 MWThe development of offshore wind presents significant economic opportunities,with the potential to create 83,000 jobs in the US by 2030.Additionally,offshore wind projects offer price stability as elect

305、ricity prices can be locked for 20 years or more,providing a hedge against volatile fossil fuel pricesProjected Offshore Wind Capacity in the US2As per the American Clean Power Associations projections,offshore wind capacity in the US will reach 9GW by 2026 primarily through the development of 13 of

306、fshore projectsThe US government has set a target to attain 30 GW of energy from offshore projects by 2030.Moreover,the offshore wind capacity is expected to surpass 86 GW by 2050$5,892.2$5,464.1$926.0$102.2$75.4 161812141602468101214161820$0$1,000$2,000$3,000$4,000$5,000$6,000$7,000PortsManufacturi

307、ngVesselsWorkforceDevelopmentResearchUS Offshore Wind Proposed Investments(Total,as of 2023)Proposed Investment Amount(in$Mn)Number of Proposed Investments(in Units)86 GW by 20509GW by 202630GW by 2030Source:Refer to Pg.88 Energy Transition Sub-Sector Overview Battery StorageThe Battery Energy Stora

308、ge System(BESS)market in the US witnessed robust growth over the years,reaching$711.9 million in 2023.According to forecasts,the industry will continue to grow at a CAGR of 30.5%from 2024 to 2030,reaching$4,450 million by 20301The Energy Information Administration(EIA)has reported that as of 2023,th

309、e US has around 17 GW of operational utility-scale battery capacity.The figure is expected to rise to 30 GW by 2024.With the additional capacity,battery storage is expected to surpass the capacity of traditional energy sources such as petroleum liquids,geothermal resources,wood and wood waste,and la

310、ndfill gasThe following two factors have driven the rapid increase in battery storage capacity:US Battery Storage Capacity(Current and Projections)1,2 44The investment tax credits provided by the Biden administrations IRA have significantly contributed to the growth of battery storage in the US.Deve

311、lopers(companies that are involved in the planning,construction,and operation of utility-scale battery storage projects)anticipate the initiation of over 300 utility-scale battery storage projects in the country by 20251The growing demand for battery storage capacity in the US is fueled by the risin

312、g utilization of renewable sources for electricity generation.Battery energy storage systems(BESS)play a crucial role in storing the excess power generated by renewable sources such as solar and wind during periods of low demand,subsequently releasing it when demand is higher24014805767128871,1261,4

313、461,9012,4833,3054,454050010001500200025003000350040004500500020202021202220232024202520262027202820292030ForecastBESS Market in the US(in mm)1CAGR:30.5%Source:Refer to Pg.88Energy Transition Sub-Sector Overview Battery Storage(Cont.)45Challenges Faced by the Battery Storage Sector in the USAvailabi

314、lity of Raw MaterialsThe availability of essential raw materials is an obstacle to meeting the anticipated surge in battery storage demand by 2030While lithium and phosphorus sources within the US and Free Trade Agreement(FTA)partners are projected to mature adequately by 2030 to cater to domestic b

315、attery needs,the majority of these resources are situated outside US borders.Consequently,domestic manufacturers have to procure these materials from other countries,such as ChinaThe scarcity of graphite,an anode active material crucial for BESS manufacturing,presents an even more pressing challenge

316、.There is a lack of natural graphite production in the US and China controls over 60%of global natural graphite mining1While suppliers in Canada and Australia can meet a notable share of the US current graphite demand once their ongoing projects start operating,the supply of natural graphite is expe

317、cted to be inadequate to meet the demand in the US by 2030Optimization of Production YieldsIn the US,emerging battery cell producers have production yields as low as 50%,while established competitors in the US achieve nearly 90%yield and Chinese counterparts approximately 98%.These significant gaps

318、pose competitive obstacles for manufacturers in the country1Improving production yields is essential for maintaining the cost efficiency of US-made batteries.This endeavor requires significant workforce expansion and training,often involving collaboration with more experienced international partners

319、Cost Competitiveness:Raw materials are a major expense for large-scale battery plants,with those used to produce cathode active material(CAM)being the most costlyThe price of lithium carbonate,a critical raw material,has fluctuated significantly in recent years.It ranged from$13.5/kg to$76/kg during

320、 202022 and reached$36/kg in May23 and nearly$48/kg in Jul23.Despite a subsequent decline to approximately$29/kg in Feb24,this uncertainty presents a significant challenge to manufacturers competitiveness and profitability2For instance,estimates suggest that a$30/kg increase in lithium costs can inf

321、late battery cell prices by 25%,compelling manufacturers to adopt strategic sourcing and bulk procurement to mitigate material cost escalations which in itself is an arduous endeavor3The IRA offers production incentives that can slash battery cell costs by over 40%.However,the utilization of these i

322、ncentives depends upon compliance with domestic regulations and recycling mandates,which become increasingly stringent every year295733383243Anode ActiveMaterial CapacityGigafactory Demandfor Anode Active MaterialAnode Active Material Potential Capacity and Demand(US&FTA,2030,in Kilotons)1FTAUS45Sou

323、rce:Refer to Pg.88 Energy Transition Innovations Battery Storage Redox Flow Batteries1Redox flow batteries are versatile energy storage systems characterized by their extended lifespan,high energy efficiencies,and affordability.They comprise two tanks containing electrolyte liquids and oppositely ch

324、arged electrodes,interconnected by a membraneTheir longer lifespans and increased scalability as compared with lithium batteries support utility-scale integration of renewable energy Amid the rapid evolution of the renewable energy sector,industry players are undertaking extensive research to create

325、 efficient and long-lasting solutions and accelerate the transition to clean energySolid-state Battery TechnologySolid-state batteries replace flammable liquid electrolytes with solid compounds,thereby enhancing safety and efficiency,especially in extreme temperatures.Manufacturers of these batterie

326、s use solid electrolytes such as polymers and organic compounds,offering high ionic conductivityThese batteries use high-voltage,high-capacity materials,which enhance their energy density,portability,and shelf life.Their superior power-to-weight ratio makes them ideal for EVsGravity-based Energy Sto

327、rage SolutionsGravity-based energy storage,like gravity batteries,captures gravitational energy to store and generate electricity.It involves raising a mass with surplus energy from sustainable sources,converting it to potential energy,and then lowering it to generate electricity with an electric ge

328、neratorOne such advancement involves the use of mobile masses.Composite blocks or custom-made bricks are lifted and lowered to store and dispatch energyEnergy Vault is one of the leading companies developing unique gravity-based energy storage technologies.It is developing one of its systems in Texa

329、s in collaboration with Enel Green Power.Its systems employ a mechanical process to lift and lower composite blocksFactorial,a player in advancing solid-state battery technology for EV usage,unveiled the inauguration of its latest battery manufacturing plant located in Methuen,Massachusetts.This cut

330、ting-edge facility marks a crucial milestone in the expansion of Factorials production capacity for its groundbreaking solid-state battery technology tailored for EVsXL Batteries,a US-based start-up,manufactures saltwater-based flow batteries that utilize inexpensive organic molecules,thereby offeri

331、ng cost-effective and non-corrosive energy storageInvinity specializes in vanadium flow batteries,addressing the decay and capacity loss found in lithium batteries.Its batteries are ideal for C&I sites,on and off grid projects either as standalone or alongside renewable energy systems46Source:Refer

332、to Pg.89 Energy Transition Innovations Battery Storage(Cont.)Note:*Lithiation is the process wherein lithium ion replaces a hydrogen atom in an organic molecule Iron-air batteries represent a groundbreaking advancement in high-performance energy storage,originating from NASAs research in the 1960sOf

333、fering superior reliability,safety,efficiency,and longer-term storage compared to traditional technologies,they hold significant promise for transforming grid-scale energy storageIron-air Battery SystemsCement-based Supercapacitors Researchers at the Massachusetts Institute of Technology(MIT)have developed a groundbreaking technology that allows houses to be powered directly from their foundations