Market Insights

# 2023 EIA Solar and Battery Storage Outlook

February 16, 2023 by Shannon Cuthrell

## Solar and battery storage projects will add new utility-scale generating capacity to the power grid this year. It’s the amount that will astonish you.

The U.S. Energy Information Administration (EIA) projects 54.5 gigawatts (GW) of new utility-scale electric capacity will join America’s power grid in 2023, with solar accounting for 54% and battery storage claiming 17%.

### Solar and Battery Energy Storage

The EIA’s latest solar outlook charts a rapid increase from 2022 when utility-scale solar capacity additions fell by 23% due to pandemic-related supply chain bottlenecks. But solar developers are ramping up their plans this year, adding 29.1 GW—the most capacity in a single year and more than double 2021’s 13.4 GW.

Meanwhile, battery storage capacity is expected to increase twofold in 2023 as developers add 9.4 GW to the grid’s existing 8.8 GW. Battery energy storage system (BESS) deployment has skyrocketed over the last few years, from just 1.5 GW in 2020, partly because they contain higher capacity. The EIA reported in December that the largest battery storage project before 2020 was only 40 MW; now, developers are planning around two dozen large-scale battery projects (some reaching up to 650 MW) before 2025.

##### The U.S. Energy Information Administration projects a sharp rise in new solar capacity as developers resume projects that were delayed due to supply chain issues. Image used courtesy of the EIA

Geographically, Texas and California will account for nearly half of new solar capacity, with 7.7 GW and 4.2 GW, respectively. And since both states claim the bulk of America’s existing solar and wind power, they’re also expected to add the most battery storage (71%) to manage renewable supply and demand.

The new data comes after the EIA reported in January that solar and wind are expected to make up 16% of the U.S.’s total electricity generation mix this year, up from 14% in 2022. Both clean energy sources have risen over the last few years, though solar’s share has outpaced wind. Solar capacity is three times that of 2017 and is slated to grow from a 3% share of total power generation in 2022 to 5% this year.

### Wind Development

On the wind front, the EIA reports that developers plan to add 6 GW of utility-scale wind capacity this year, slowing their pace from the record additions topping 31 GW in 2020 and 2021 combined. Most are land-based wind farms in Texas, claiming about one-third of new capacity.

Wind capacity grew more than 60% over the last five years, but rising construction costs have left its projected share of total electricity generation near what it was last year, around 11%. Before that, wind developers installed a record 14.2 GW in 2020, leading up to the full value of the wind Production Tax Credit expiring (though it was later extended). Another record-high 17.1 GW of wind capacity entered the grid in 2021.

Offshore wind development has gained steady traction over the last few years, with the U.S. Department of the Interior hosting several competitive lease auctions through its Bureau of Ocean Energy Management (BOEM) unit. Still, only 130 megawatts (MW) of offshore wind capacity is expected to be added this year through one site: A 12-turbine project off of New York’s Long Island coast is slated to be operational by the end of 2023, providing enough power for 70,000 homes, according to the developers’ website

One reason for slow development is the barrier of outdated regulations and lengthy approval processes, drawing contention from stakeholders such as Siemens Gamesa. However, the BOEM recently announced plans to revamp its rules to facilitate more offshore deployment in the coming years. Its proposed rule changes were published late last month, with comments closing on March 31.

The Department of the Interior intends to hold up to four offshore lease sales by 2025 and review at least 16 plans to construct/operate commercial facilities totaling more than 22 GW.

### Nuclear and Natural Gas

The EIA also reports that 2.2 GW of new nuclear capacity will be added to the power grid in 2023: Two reactors at Georgia’s Vogtle nuclear plant. They represent the first new units built in over three decades, albeit several years later than planned. In 2019, the U.S. Department of Energy (DOE) provided $12 billion in loan guarantees to finance the construction of the nation’s only active advanced nuclear site being developed at the time. The federal government is ramping up its funding to support nuclear development. Later this year, the DOE is expected to open its second round of applications for the Civil Nuclear Credit (CNC), which aims to continue operations at plants that risk shutting down over economic factors. Late last year, the agency extended its first round of conditional credits ($1.1 billion) to Pacific Gas & Electric to keep the Diablo Canyon Power Plant in California operational. Located along the Central Coast, the plant hosts California’s only two nuclear power reactors and was initially scheduled for decommissioning in 2024 and 2025.

##### California and Texas claim the bulk of planned wind and solar capacity additions in 2023. Image used courtesy of EIA

Meanwhile, the EIA anticipates that natural gas developers will build 7.5 GW of new capacity this year, with 83% being combined-cycle plants. The largest upcoming plants are Ohio’s 1.8 GW Guernsey Power Station, a $1.4 billion project expected to generate enough electricity for 1.5 million homes, and Illinois’ 1.2 GW CPV (Competitive Power Ventures) Three Rivers Energy Center, a$1.3 billion development offering enough capacity for 1.25 million homes.

But those additions come as 6.2 GW of natural gas-fired capacity is slated to retire this year—most of which is made of older steam and combustion turbine units. About one-third of those retirements are three plants in California that were initially scheduled to retire in 2020 but received a three-year extension to maintain grid reliability in the state.