New Survey: 100% of Renewable Investors Perceive U.S. Market Increasing in Attractiveness Compared to Other Leading Countries Post-IRA

A new analysis released today by the American Council on Renewable Energy (ACORE) assesses how the Inflation Reduction Act (IRA) is impacting the near- and mid-term outlooks of some of the most prominent investors and developers in the renewable energy sector. The report, Expectations for Renewable Energy Finance in 2023-2026, also presents survey results addressing the headwinds currently hindering the rate of clean energy development and the potential impacts of new and different financing structures, such as transferable tax credits, on the market over the next three years.

"America has never been a more attractive venue for renewable energy investment than it is today, thanks largely to the policy certainty provided by the IRA,” said ACORE President and CEO Gregory Wetstone. “Even as tremendous opportunity awaits, there are still serious market challenges that must be resolved to realize the potential of the IRA and achieve the Biden administration’s goal of power sector decarbonization by 2035."

While many of the same headwinds that existed before the IRA’s enactment (grid-related issues, supply chain challenges, trade restrictions, tax equity constraints) continue to impact renewable investors and developers, the new analysis finds the IRA has already increased companies’ participation in the renewable energy market in 2023. All surveyed developers and most investors said they plan to increase their activity in the U.S. renewable energy sector compared to last year, with 84% of investors planning to increase their U.S. renewable energy investment by 5% or more.

Additional survey findings:

• For the first time in the six years ACORE has conducted investor surveys, investors unanimously expect the U.S. to increase in attractiveness for renewable energy investment in 2023-2026 compared to other countries.
• Most investors (83%) expect the attractiveness of renewable energy to moderately or significantly increase compared to other asset classes in their portfolios in 2023-2026. None of the investors surveyed expect the attractiveness of renewable energy to decrease.
• Survey respondents commented that headwinds such as supply chain constraints, trade restrictions, interconnection queue delays, and insufficient transmission capacity create significant risk challenges that can lead to delays in deal flow, longer lead times, and increased project costs.
• One-third of developers have reduced their risk profiles in 2023. However, most large developers and many investors are willing to take on increased risks.
• More than one-third of investors and developers expect a decrease in tax equity accessibility this year, but of the surveyed investors who specifically invest in tax equity, 45% expect to see an increase this year compared to 2022.
• Over 80% of surveyed investors plan to utilize tax credit transferability or direct pay.
• Survey participants agree that the tax equity market must nearly triple in size (from $18-20 billion annually to over $50 billion) to meet heightened post-IRA demand.
• Recent attempts to limit ESG investment have affected one-third of investors and developers.
• Over 90% of surveyed investors and developers prioritize low-to-moderate income or energy communities (as defined by the IRA) to some extent in their renewable investment or development decisions.
• For the second year in a row, investors ranked utility-scale solar, energy storage, and commercial solar as the top three most attractive clean energy sectors for investment over 2023-2026.
• PJM, MISO, ERCOT, and CAISO were selected as the top power markets for renewable energy investment and development in 2023-2026.
• Many survey respondents reported plans to participate in domestic efforts to expand clean energy manufacturing. More than one-third of investors (38%) plan to invest in domestic clean energy manufacturing facilities in the U.S. Twenty-eight percent of developers report plans to open a new manufacturing plant, and 33% plan to incentivize their suppliers to open domestic facilities.

The report concludes with the policy reforms and market drivers that ACORE is pursuing this year to accelerate renewable energy growth, maximize the impact of the IRA, and reduce the effect of sector headwinds.

To download Expectations for Renewable Energy Finance in 2023-2026, click here.