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What the SunZia Groundbreaking Means for Renewable Investment
The largest renewable energy infrastructure project in the U.S. has officially broken ground. After finally being approved in May, the SunZia wind project will install a 3.5 gigawatt (GW) capacity1 wind farm in central New Mexico and stretch 550 miles of transmission lines2 to central Arizona, then westward into California. The SunZia wind project is estimated to fulfill the energy needs of 3 million people1 when the project comes online in 2026. As of 2021, the population of Arizona was just over 7 million.
This project is beginning in the midst of what is estimated to be the biggest year for renewable energy projects in the U.S. The SunZia wind project alone is adding nearly one fifth3 of the total wind capacity that was added in the US in 2020 and makes significant progress toward achieving the Biden administration’s goal4 of permitting a total of 25 GW of solar, onshore wind, and geothermal energy on public lands by 2025.
But the permitting process remains one of the greatest barriers to renewable energy infrastructure projects in the U.S. right now. The SunZia project took ten years2 to get approved. The other buzzkill for renewable capacity growth is the interconnection queue. At the end of 2022, more than 2,000 GW were waiting to be connected across the country, which would double the nation’s current energy generation capacity once added.
Fortunately, the backlog may soon dwindle with the U.S. Federal Energy Regulatory Commission’s recent passing of reforms to improve the interconnection process. As perhaps a sign that the regulatory landscape is moving in a favorable direction, U.S. Interior Secretary Deb Haaland2 said the latest SunZia proposal was accepted in record time.
In the immediate term, inflation, interest rates, and supply chain inefficiencies remain lingering issues. But Michael Cerasoli, Co-Head of Eagle Global’s Energy Infrastructure team, says access to capital does not appear to be limiting renewable energy projects. The SunZia wind project is an investment of more than $5 billion1, most of which is derived from private sources.
In the face of these barriers, renewable energy has been gaining momentum with all signs pointing toward that trend accelerating. The US Department of Energy estimates that transmission lines specifically need to expand 60% by 2030 and triple by 20502 in order to meet U.S. climate goals and energy needs. When asked about what the SunZia project indicates for the industry, Michael Cerasoli said, “This is the attractive long-term opportunity we’ve been talking about. We expect a lot more projects like this in the near future.”
There indeed need to be many more projects like this in the future if we are to increase global renewable energy capacity by 1,000 GW every year5 by 2030. The TrueShares Eagle Global Renewable Energy Income ETF (RNWZ) is designed to offer investors core renewables exposure and income, and seeks long-term growth of capital by investing in renewables infrastructure companies that are providing value through accelerating the global transition to clean energy. If SunZia is any indication, the investment potential has only just begun.
- https://patternenergy.com/projects/sunzia-wind/
- https://www.knau.org/knau-and-arizona-news/2023-09-01/largest-renewable-energy-infrastructure-project-in-u-s-breaks-ground-in-new-mexico
- https://css.umich.edu/publications/factsheets/energy/us-renewable-energy-factsheet
- https://www.whitehouse.gov/briefing-room/statements-releases/2022/01/12/fact-sheet-biden-harris-administration-races-to-deploy-clean-energy-that-creates-jobs-and-lowers-costs/
- https://www.irena.org/News/pressreleases/2023/Jun/Annual-Renewable-Power-Must-Triple-by-2030
Because the Fund invests in renewable infrastructure companies, the value of Fund shares may be affected by events that adversely affect companies in that industry. These can include contract counterparty defaults, adverse political and regulatory changes, poor weather conditions for renewable power generation, falling power prices, losses on financial hedges, technological obsolescence, competition and general economic conditions.
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