US renewables investment can reach $1tn (€871bn) by 2030, according to new analysis by the American Council on Renewable Energy (ACORE).
Expectations for Renewable Energy Finance in 2020-2023 presents the results of a new survey of financial institutions and renewable energy developers on their confidence in the sector amid the ongoing impacts of Covid-19.
The study found that investors remain optimistic about long-term renewable energy growth, even as companies experience “significant near-term headwinds” resulting from the pandemic.
The report also tracks progress on the $1T 2030: American Renewable Investment Goal.
ACORE launched the initiative in 2018 to help secure $1tn in private sector investment in renewable energy and enabling grid technologies by 2030.
One eighth of the total $1tn campaign goal has been met.
To achieve the remaining investment by 2030, an average of $87.5bn a year will need to be invested through 2029, said ACORE.
This represents an annual increase of 28% over the 2019 investment level.
The report notes that the Covid-19 pandemic, economic recession and recent policy developments have created “near-term headwinds” for sector investment, slowing the pace of growth in 2020.
ACORE CEO Gregory Wetstone (pictured) said: “While it’s clear we’ve made important progress toward our goal, achieving $1 trillion of private sector investment by 2030 will require policies that allow the renewable industry to grow through the challenges associated with the pandemic.
“Fortunately, as our survey results show, the fundamental health of the sector is strong and renewable energy remains one of America’s most attractive investment options.”
The study also found the US remains an attractive venue for investment in renewable energy compared to other leading countries.
Energy storage ranks as the most attractive sector for investment between 2020 and 2023, followed closely by utility-scale solar and residential/commercial solar.
The majority of surveyed investors do not expect significant long-term impacts from Covid-19, but half of the surveyed developers report that their immediate development plans have changed significantly.
Three-quarters of surveyed tax equity investors predict a decline in tax equity investment, and two-thirds of surveyed developers report difficulty in securing financing or project offtakers due to Covid-19.
ACORE concluded achievement of the $1tn 2030 goal will require market and policy changes.
Pillsbury Winthrop Shaw Pittman partner and ACORE board member Mona Dajani said: “Last year, three-fourths of the corporate power purchase agreements for renewable energy projects were located in the US.
“That is starting to shift as European corporate companies take a greater interest in direct purchasing of renewable energy too.
“Renewable energy-focused infrastructure funds raised over $20bn last year, four times the year before.
“That will accelerate with wider use of sustainability-linked debt products such as ‘Green Loans/Bonds’ and ‘Sustainability-Linked Loans/Bonds,’ which are linked to borrowers’ performance on environmental, social and governance (ESG) issues.
“Pioneered in Europe, but set also for growth in the US and Asia, such loans offer borrowers discounted rates if they meet ESG targets.”