Supply chain bottlenecks remain a "huge issue" for the fast-growing renewable energy industry, costing the sector an estimated $2 billion a month in delayed investment and unsettling investors with the threat of project interruptions, said Leo Moreno, president of AES Clean Energy, a business unit of The AES Corp.

While big project developers like AES say their purchasing power has largely insulated them from the turmoil, smaller companies have been bogged down by equipment shortages and delayed deliveries. That has led to frustration among renewable energy buyers, Moreno said in an interview Feb. 4, including some of the world's top technology companies, which have become a major source of demand in recent years.

Those logistics challenges, combined with rising commodity prices and the prospect for higher interest rates, have fueled a sell-off in renewable energy stocks despite surging demand for carbon-free energy.

Shares of AES, the top provider of renewable power to corporate buyers in 2021, were down 10.58% this year as of Feb. 7.

"AES signed 5 GW of [power purchase agreements] last year. So when we start bringing 5 GW online, I think our investors are going to see, OK, these guys are executing." Moreno said, adding that the company uses interest rate swaps to guard against the effects of tighter monetary policy.

"As we prove that we're delivering the same returns" as interest rates rise, "I think that normalizes" investor sentiment, Moreno said.

The company, which has a U.S. project pipeline totaling more than 40 GW, plans to report 2021 financial results on Feb. 25. Analysts expect adjusted earnings of $1.52 per share compared to adjusted 2020 earnings of $1.44 per share, according to the S&P Global Market Intelligence consensus mean estimate.

AES has become a leader in trying to provide around-the-clock, carbon-free power to corporations such as Microsoft Corp. and Alphabet Inc. subsidiary Google LLC. "Each of them may require some specific type of innovation," Moreno said. "And the customers are willing to co-create with us because we are perceived as this [energy transition] platform."

Adding to the supply chain disruptions caused by the COVID-19 pandemic, the solar industry has been scrambling to rework its sourcing strategies in response to U.S. allegations of labor abuses in its Chinese supply chains. The Uyghur Forced Labor Prevention Act, which President Joe Biden signed at the end of 2021, will ban goods from China's Xinjiang region unless importers can document that their products from Xinjiang were not made with forced labor. The region is a major producer of the raw material polysilicon for solar panels.

"The issue has been that the documentation that is requested [by U.S. Customs and Border Protection] to prove that you don't have forced labor is to a level that the Chinese companies are not allowed to disclose," said Moreno, whose company is now working with suppliers from Germany, South Korea and other parts of the value chain. "... I don't think this is going to get better over time."

The Chinese Embassy in Washington did not immediately respond to a message seeking comment on Feb. 7. China has denied committing labor abuses in Xinjiang.

Some American lawmakers are trying to attract more renewable energy manufacturing to the U.S. Biden said Feb. 4 that he will extend for four years tariffs that former President Donald Trump imposed on most imported solar panels. However, manufacturers said the duties will be useless because of exemptions created by the Biden administration.

"I think there's a real desire and prospect" for developing a U.S. solar supply chain, Moreno said. The challenge, he said, is incentivizing domestic production while allowing enough imports of the equipment and components that manufacturers and project developers need to continue growing.