In a divided renewable landscape, the solar market thrived in 2023, while wind encountered significant obstacles. The wind and solar sectors experienced the weight of project inputs, labor and capital cost pressures, as well as delays in interconnection and permitting, along with limitations in transmission. On the other hand, supply chain limitations began to ease as impactful clean energy and climate laws were implemented.
The convergence of federal investments in clean energy and the growing demand for decarbonization from both public and private sectors has reached unprecedented levels. As we enter 2024, these powerful drivers have the potential to overcome the obstacles that arise from the transformative changes required to meet our country's climate goals. The upcoming year promises a variable-speed takeoff for renewable technologies, industries, and markets, with a careful balance of progress and challenges. In this guide, we will examine the key milestones achieved in renewable energy production during 2025 and present insightful predictions for the year ahead in 2025.
A Review of Renewable Energy Development in 2024
2024 saw renewable energy sectors achieve record-breaking growth in capacity, employment, and investment. With a total installed capacity of over 219.8 gigawatts (GW) as of Q4 2024, solar energy has become one of the fastest-growing sources of renewable energy in the U.S.
Federal Investments in Renewable Energy
2024 marked an all-time high in renewable energy investments, with global funding exceeding $600 billion. The IIJA and the IRA have boosted renewables through historic investment in new or expanded programs, grants, and tax credits to accelerate the deployment of established and emerging renewable technologies. Over the past two years, they helped catalyze $227 billion of announced public and private investments in utility-scale solar, storage, wind, and hydrogen.
Renewable Energy Generation
The International Renewable Energy Agency (IRENA) reported a 13% increase in renewable energy capacity worldwide in 2024. Solar energy remained the frontrunner, contributing over 50% of the capacity additions, while offshore wind continued expanding with significant investments in Europe and Asia. Emerging technologies like wave and tidal energy recorded promising pilot programs, showing potential to diversify the future energy mix.
The Growing Demand for Decarbonization
States are continuously refining their Renewable Portfolio Standards (RPS) policies, often by setting more ambitious targets or adopting broader Clean Energy Standard (CES) frameworks. Of the 29 states, plus Washington, D.C., that have implemented RPS policies, 16 have set targets of at least 50% of retail electricity sales, while 4 states have committed to achieving 100% RPS. Additionally, 16 states have embraced broader CES policies that aim for 100% clean energy. Since 2000, nearly half of the growth in U.S. renewable electricity generation and capacity can be attributed, at least in part, to these state-level RPS requirements.
To reach these goals, it is becoming more clear that public land will need to be utilized for renewable energy purposes. The Bureau of Land Management (BLM) has recently announced a proposed update to its renewable energy regulations. The aim is to encourage the development of solar and wind energy on public lands. This proposed Renewable Energy Rule seeks to reduce fees nationwide and streamline the process for development in priority areas. These efforts align with the Biden-Harris administration's ambitious goals of permitting 25 gigawatts of clean energy on public lands by 2025 and transitioning to 100 percent carbon-free electricity by 2035.
2025 Renewable Energy Industry Outlook and Predictions
Looking ahead, the renewable energy industry is poised for an even more dynamic year in 2025. Here are some trends and projections you should keep an eye on:
Solar and Wind to Dominate
Through 2025 and beyond, solar and wind power will likely continue to dominate, with more installations entering the power grid consistently. According to predictions from SEIA, the nation’s cumulative solar capacity will be enough to power over 71 million homes by 2029, marking a significant milestone in renewable energy growth. It's also expected that at least 15% of U.S. homes will have a solar PV system installed by 2030. The SEIA also expects that 450 GW of new solar capacity will be installed over the next 10 years.
The Importance of Energy Storage
2025 will see energy storage technologies at the forefront of renewable energy discussions. With grid reliability tied to renewable energy uptake, advancements in battery technology—specifically lithium-ion alternatives such as solid-state batteries—will be critical. Additionally, pumped hydro and hydrogen storage are expected to scale, providing long-term solutions to balance intermittent energy supply from renewables.
Landowners Take on a Bigger Role
Landowners and real estate professionals stand to capitalize on renewable energy development in 2025 in new ways. Leasing land for solar and wind farm development remains a key revenue source, with increased competition from developers raising lease rates. Additionally, emerging trends like agrivoltaics (farming underneath solar panels) provide dual-use opportunities that combine renewable energy generation with agricultural productivity.
The Data Center Boom
The exponential growth in digital services, cloud computing, and artificial intelligence is driving a significant increase in energy demand from data centers. By 2025, data centers are expected to consume around 4% of the global electricity supply, highlighting the urgent need for sustainable solutions. Leading tech companies are pioneering the adoption of renewable energy to power their operations, with large-scale investments in dedicated solar and wind farms. For instance, hyperscale data centers are increasingly entering Power Purchase Agreements (PPAs) to meet sustainability targets and achieve carbon neutrality.
On the innovation front, advances in energy-efficient cooling systems and AI-driven energy management are becoming critical in reducing the carbon footprint of data centers. Technologies such as liquid cooling and advanced heat recovery systems are expected to see broader implementation. Additionally, the rise of green data centers—built with sustainable construction materials and optimized for renewable energy use—will play a key role in mitigating the environmental impact of the digital economy.
Challenges of Renewable Energy Development in 2025
Despite these positive developments, the renewable energy industry still faces several challenges. From the need for continued investment in research and development to address technological limitations, to the importance of scaling up renewable energy infrastructure to meet global energy demands, there are hurdles that need to be overcome.
Government Policy Uncertainty
The outcome of the 2024 presidential election introduces a significant degree of uncertainty regarding renewable energy development policies and incentives. Shifts in administrative priorities could lead to changes in funding, tax credits, and regulatory support for renewable energy projects. This policy ambiguity could obstruct progress in 2025, making it critical for businesses to adopt flexible strategies while closely monitoring legislative developments.
Transmission and Energy Grid Constraints
One of the main obstacles is the process of interconnection and permitting for new projects. This has been a long-standing issue that can delay or even prevent renewable energy projects from being built. However, with the growing demand for decarbonization and investments in clean energy, there is an opportunity to improve and streamline this process in 2025. The IIJA and the IRA have allocated significant funds for grid modernization, which could help alleviate these challenges. These include the DOE’s announced plans to accelerate high-voltage transmission line permitting, $3.9 billion in grants from the Grid Resilience and Innovation Partnerships Program, and $1.3 billion in grants for three interregional grid projects.
Supply Chain Concerns
Supply chains for critical materials such as rare earth elements (needed for batteries, solar panels, and turbines) are still under strain. These supply chain issues can delay projects, increase costs, and ultimately slow down the growth of the industry. However, with increased federal investments and support for domestic manufacturing, there is potential for these supply chain challenges to be alleviated in 2025.
Labor and Capital Costs
The increase in labor and capital costs can also pose challenges for renewable energy projects. The rising cost of materials, such as steel and copper, along with labor shortages due to the pandemic, can significantly impact project budgets and timelines. Similarly, sustaining the growth of renewable energy will require expanding and (re)training a workforce with the right skills. With a renewed focus on job creation and training in the renewable energy sector, there is potential for these challenges to be addressed in 2025.
Lack of Suitable Sites
The data center boom in 2024 created a 'gold rush' for suitable properties. Properties that are well-suited for data centers are also generally well-suited for renewable energy projects, which has increased the level of competition among developers and decreased the availability of land. Balancing competing interests and finding alternative solutions like floating solar or repurposing brownfield sites will be crucial to continue expanding renewable energy infrastructure.
Looking Ahead
As we look ahead to 2025, the renewable energy industry is poised for significant growth and progress. The overall federal investments through the IIJA and IRA have provided a boost to the industry, and with continued efforts to decarbonize and increase renewable energy generation, we can expect to see more advancements in the coming years.
LandGate's suite of PowerTools helps renewable energy developers plan and manage projects seamlessly, while our marketplace allows them to connect with interested private and public landowners who have listed their land for lease. If you own property and are interested in leasing it for renewable energy development, you can list for free on LandGate's marketplace with no obligation to accept any offers:
