U.S. renewable energy will gain $120 billion in investment by 2026 and could add a record level of new capacity, up to 62 GW, as projects rush to meet increased energy demand and claim tax credits for solar and wind projects, the American Council on Renewable Energy said in two new reports and at its May 13 sector finance conference in New York City.
But federal actions undermining the projects, still-unclear tax credit rules and slow grid connection could hold back future investment, experts said. In a late April study for ACORE, S&P Global said solar and battery storage would see the biggest investment this year, about $53 billion and $22 billion, respectively.
“Corporate buyers are no longer just participants in clean energy markets,” said Rich Powell, the group’s CEO. “They’re shaping the grid itself.” Solar remains the leading clean technology by capacity in 2025, but nuclear overtook wind for the first time as the second most favored technology by buyers. Investments in geothermal, hydro, energy storage and emerging technologies such as fusion and carbon capture also increased. But the group said infrastructure constraints, political uncertainty and geopolitical instability are contributing to higher power purchase agreement prices.
The deadlines for using the federal tax credit are approaching
Federal tax credits that require wind and solar projects to begin construction by July 4 and be operational by the end of 2027 are key incentives to move work forward now. But vague federal rules about whether project components or investment can come from countries of “concern,” such as China and Russia, could prevent more renewable developers from claiming those incentives.
ACORE said: “Investors surveyed explicitly named federal regulatory policy changes and interconnection delays as their biggest obstacles. Industry leaders collectively emphasized that long-term deployment depends entirely on Congress providing stable and lasting policy certainty.”
In addition, administration delays in approving roughly 80 projects, mostly wind power on military sites and elsewhere, have eliminated the ten most attractive markets for investors, ACORE reports concluded. A Massachusetts court last month ordered the Trump administration to stop blocking 57 GW of clean energy projects, but is expected to appeal the ruling. The government’s continued effort to derail the sector is expected to hamper progress in congressional negotiations on project permitting reform, another market stimulus investors want to see.
“I’m having pipeline conversations all the time with lenders. Solar and battery storage projects will continue to be competitive,” Kevin Smyth, CEO of developer and operator Cypress Creek Renewables, told attendees. “If you think gas is going to rescue the whole industry, it’s not going to happen. There’s a big role for battery storage going forward. The next 24 months are going to be pretty dynamic.”
.
Looking for quick answers on construction and engineering topics?
Try Ask ENR, our new intelligent AI search tool.
Ask ENR →
