Renewables Evolution: Part 1 - The Hype Cycle Meets Reality
By Bryan Kaus
The question I'm getting most lately: Are renewables dead?
My answer: No.
But they're growing up.
After a decade of capital enthusiasm, we're seeing a necessary recalibration. Major players like BP, Shell, and Ørsted have pulled back from aggressive renewable buildouts. Ørsted alone took a $5.6 billion write-down on U.S. offshore wind projects. Over 100 U.S. solar companies exited the market in 2024.
This isn't abject failure, rather it is sector maturation. The sector is shifting from "growth at any cost" to disciplined execution. The other thing to caution is to not look at renewables (or alternatives) as a monolith - they are multifaceted.
The drivers are clear: rising interest rates turned renewables' future cash flows less attractive, supply chain inflation squeezed margins, and regulatory delays created execution risk. When money was cheap, these headwinds were manageable. At higher interest rates, they're not.
But here's what the pullback headlines miss: demand fundamentals have never been stronger.
U.S. electricity consumption is set to grow ~2% annually through 2026 - the fastest pace in over a decade. AI data centers alone could double power demand growth by 2030. Microsoft, Google, and Meta aren't just tech companies anymore; they're becoming some of the largest energy buyers on the planet.
This creates both pressure and opportunity. Utilities need massive capacity additions. Data center operators need reliable, scalable power. The question isn't whether renewables have a role - they will - it's which players can deliver at commercial scale with capital discipline in the right places at the right time and at the right level for market demand.
The hype cycle is fading. The fundamentals remain intact. Discipline is where companies and investors win in this stage.