Why the US clean energy sector continues to evolve
Despite political headwinds, the US clean energy market continues to grow. For investors, the opportunity is expanding beyond renewable generation into the infrastructure needed to produce, manage and consume energy more efficiently.
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The US clean energy market is evolving rather than retreating. Despite a less predictable political and regulatory backdrop, electricity demand continues to rise, while renewables remain among the most readily deployable and cost-competitive sources of new power generation.
At the same time, the investment opportunity is broadening. The energy transition is increasingly about more than wind and solar generation, extending into the infrastructure needed to manage, store and consume electricity more efficiently.
Minal Patel, Global Head of Infrastructure at Schroders Capital, and Saad Qais, Head of US Investments at Schroders Greencoat, look at how the US clean energy market is evolving and where new investment opportunities are emerging.
Key takeaways include:
- US clean energy development has proved resilient. Around 45GW of new onshore wind and solar capacity is expected to be added in 2026 despite the phase-out of federal incentives and continued political uncertainty.
- Rising power demand remains a powerful structural driver. Growth in data centres and AI, manufacturing reshoring and wider electrification are placing greater demands on the US power system and increasing the need for new generation and supporting infrastructure.
- The opportunity is moving beyond renewable generation. Grid upgrades, battery storage and infrastructure supporting the electrification of transport, buildings and industry are creating a broader investment universe across the risk-return spectrum.
- Battery storage is becoming increasingly important as renewables scale. Storage can help balance intermittent generation, reduce curtailment and support the grid during periods of stress, while offering investors a range of contracted and merchant revenue models.
- The US and European energy transitions have developed differently. Europe has historically been more policy-led, while the US has been more market-driven. Experience across more mature European technologies and revenue models can therefore provide useful perspective as US markets continue to evolve.
Why the US clean energy sector continues to evolve
Despite political headwinds, the US clean energy market continues to grow. For investors, the opportunity is expanding beyond renewable generation into the infrastructure needed to produce, manage and consume energy more efficiently.
US clean energy continues to benefit from strong trends in expected long-term demand, albeit in the context of a less predictable political and regulatory environment.
The Trump administration has been vocal in its support for fossil-fuel generation and its criticism of renewables, particularly wind power. Few sector participants were surprised, then, when the One Big Beautiful Bill Act (OBBBA) passed in July 2025, phasing out federal incentives for renewable energy.
What is perhaps more surprising, 15 months later, is the evident resilience of clean-energy development despite significant regulatory change and political noise. According to S&P Global Energy Data cited by the Financial Times, a record of roughly 45 gigawatts of new onshore wind and solar capacity should be added in the US in 2026 — enough to power more than 33 million homes — despite reduced federal incentives. That figure represents a 25 percent increase over the previous record set in 2024.
Demand drivers and risks
The near-term surge in development is partly a response to the phase-out of federal tax incentives, with developers accelerating projects to secure subsidies before they disappear. It also reflects the fact that renewables - especially solar - remain the most readily deployable and cost-competitive electricity source in many regions.
In the longer term, renewable energy is expected to continue to play an increasing and critical role in the US fuel mix. Developers continue to develop projects that will reach commercial operation post-2030. This is in part due to electric utilities expressing a keen desire to support the renewable build-out and incorporate fuel diversification in their long-term resource planning.
As for continued regulatory and policy risk, the upcoming mid-term elections in the US may test the current administration’s ability to direct capital toward, or away from, specific sectors through policy changes and executive orders — at least in the long term. Meanwhile, another factor influencing the political and strategic landscape for renewables in the US is the war in Iran, which has resulted in a structural increase in global demand for US gas, as well as increased US gas prices in certain regions.
Perhaps more crucially, power demand continues to increase, including as a result of the expansion in data centers and AI adoption, which creates both upward pressure on power prices and broader strain on the power network.
In the near-term, these factors reinforce a preference for a mix of energy sources, including those not reliant on fossil fuels. Ultimately — and regardless of short-term political outcomes — we expect a fundamental trend remains in play: steadily rising energy demand supports the development of US clean energy as one of many sources of power.
In the end, the most important result of a change in federal energy policy in the US might not be reduced renewable development activity but, rather, a higher focus on regulatory risk. This underscores a need for more specialised investors able to navigate an ever-shifting operational, regulatory and competitive landscape.
Beyond generation
While the build-out of traditional renewable energy in the form of solar farms and wind parks remains important to balancing the US energy supply and demand equation, the dynamics of the energy transition — and investment opportunities — have also become much broader.
As the aging coal- and nuclear-generation fleet is retired and replaced with new and more modern forms of generation, transmission infrastructure will require an upgrade, too. The location and grid requirements will need to accommodate this next wave of generation build-out. As well, new forms of energy consumption create demand for infrastructure that can support electrification across transport, buildings and industry.
This results in an increasingly diverse energy transition infrastructure market, one that includes mature assets with contracted or regulated revenues, as well as developing technologies and growth platforms with the potential to generate capital appreciation. For investors, this more diverse market results in opportunities across the risk-return spectrum, from core and core-plus through to value-add.
Battery storage: managing intermittency
Arguably one of the best examples of this increasingly diverse opportunity set in the US is battery storage. To the extent solar and wind generation varies according to weather and time of day, batteries help address potential mismatches between when power generation occurs and when that power is consumed. Batteries can store electricity when supply is abundant and release it when demand increases or renewable output falls.
This is especially valuable in markets where solar output peaks in the middle of the day but demand persists into the evening. Batteries can shift power to higher-value periods, reduce curtailment, and provide rapid-response support during grid stress.
A striking illustration circulated in industry circles in the spring: CAISO* (the electricity system operator across most of California and parts of Nevada) data showed that on March 29, battery systems delivered more than 12 gigawatts to the California grid during an evening demand peak — a striking real-time demonstration of how storage helps manage the power “duck curve.”
Storage assets also provide multiple use cases, by operating either under long-term contracts to provide grid resilience, or by offering energy-arbitrage opportunities at certain electric nodes susceptible to high power price volatility. The former use case generates stable income, while the latter typically involves higher risk but potentially higher reward. As the revenue models for batteries mature, a specialist investor — familiar with the evolution of those models — is well positioned to balance the revenue characteristics of a battery portfolio to achieve the risk-and-reward characteristics targeted by a specific fund, strategy or investor group.
A tale of two markets
Since 2012, the energy transition has evolved along markedly different paths in the US as compared to the UK and Europe.
In Europe, the transition has been primarily policy-led, driven by binding decarbonisation targets, carbon-pricing mechanisms, and a growing focus on energy security following Russia’s invasion of Ukraine — and exacerbated by the conflict in Iran. This has accelerated renewable deployment, expanded investment across offshore wind, battery storage, hydrogen, district heating, and other low-carbon technologies, and has reinforced the strategic importance of domestic energy production.
By contrast, the US transition has been more market-driven, benefiting from abundant land, natural resources, and a broader range of generation options, including natural gas. While federal policy support has fluctuated over time, strong underlying demand growth and favorable power-market dynamics continue to support renewable development.
As a result, European markets today tend to be characterised by higher power prices, greater market fragmentation, and a stronger emphasis on energy security and affordability, whereas the US market is increasingly shaped by rapid electricity demand growth from AI driven data center expansion, manufacturing reshoring and electrification.
Despite these differences, both regions have experienced dramatic declines in renewable generation costs, growing grid constraints, and an increasing need for battery storage and other flexibility solutions, creating attractive investment opportunities across generation, storage and grid infrastructure.
The relative maturity of parts of the European energy-transition landscape has also created a broader and more diverse opportunity set than has historically existed in the US.
Markets such as the UK have seen renewable generation, battery storage and other flexibility assets evolve through multiple revenue cycles, resulting in increasingly sophisticated route-to-market and risk-management frameworks. At the same time, several European jurisdictions have established targeted policy-support mechanisms for emerging sectors, such as biomethane, renewable fuels, hydrogen and industrial decarbonisation, creating investable pathways for technologies that remain less developed elsewhere.
Investors operating across Europe have been required to assess opportunities through a wide range of regulatory regimes, subsidy structures, merchant markets and contractual frame works. Evaluating a biomethane project in the Netherlands, for example, may involve many of the same analytical disciplines required to underwrite a UK hydrogen development supported by government-backed revenue stabilisation mechanisms.
This breadth of experience helps develop a deeper understanding of how technologies progress from policy-supported concepts to commercially scalable infrastructure. In our view, that perspective is increasingly valuable in today’s US market, where revenue models, market structures and regulatory frameworks continue to evolve rapidly across battery storage, renewable generation and broader energy-transition infrastructure.
This breadth of perspective may be particularly valuable in the US, as power markets evolve, battery storage scales and investors navigate an increasingly complex energy-transition landscape.
This article first appeared in the October 2026 issue of Institutional Investing in Infrastructure (i3).
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