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orange with multimedia services, published on Sunday 05 June 2022 at 07:00
Weighed down by rising freight rates and vital raw materials, the investment cost to build new solar and onshore wind capacity rose 15-25% between 2020 and 2022, ending a decade of decline, the International Agency for Energy of Energy.
Increase in the prices of fuel, raw materials, everyday food, but also paper… The inflation caused first by the Covid-19 crisis and then by the war in Ukraine is affecting all sectors.
The rise in prices, starting with that of strategic metals, is such that it could well hinder the development of renewable energies, until now driven by exponential gains in competitiveness, experts warn.
Weighed down by rising freight rates and vital raw materials, the investment cost to build new solar and onshore wind capacity rose 15-25% between 2020 and 2022, ending a decade of decline, the International Agency for Energy of Energy.
Electricity from renewable sources remains competitive with other energies, adds the IEA, but the expected maintenance for at least 2022 and 2023 of installation costs higher than before Covid could complicate its acceleration.
In one year, the price of cobalt has more than doubled, when, from January 2021 to March 2022, nickel gained 94%, aluminum 76%, copper 34%… Lithium even grew 738% in this period (compared to an annual average of +13% in the last ten years). Thus, the price of photovoltaic modules, divided by four in five years, has increased by 16% last year. The cost of wind power took 9%: offshore, in particular, suffers from the added cost of rare metals and copper, which also affects wiring and connections. As for lithium-ion batteries for electric cars, the proportion of cathode alloys increased from 3% of the total cost in 2015 to more than 20%, notes the IEA…
“Lithium skyrocketed because demand doubled in 2021 and supply couldn’t keep up. It’s a small market and a minor increase in demand causes prices to move massively,” Tae-Yoon Kim, an analyst at Lithium, told AFP. the IEA. As a result, “critical minerals threaten a cost decline that had lasted at least 10 years in renewable technologies,” Mr. Kim underlines, with “significant consequences for the financing needs of the world’s energy transition.” .
“air pocket”
In France, the industry sounds the alarm. In the solar sector, projects equivalent to a total of 2.1 GW of electricity production, that is, the bulk, which theoretically would be ready by 2022, have been paralyzed due to additional costs (metals, transport, steel, interest rates and even very high margins of the aggregators). sale of energy), identified the Union of Renewable Energies (SER). The observation applies to wind power, small hydro and even biogas.
These are contracts signed before the cost boom, which contractualized an electricity price at levels that no longer covered costs. And it is not about catching up with the rise in market prices, since the operator must return to the State the difference with what is stated in its contract.
While France expects 3 GW of additional solar energy per year, “we risk an air pocket by losing these projects”, says Alexandre Roesch, general delegate of the SER, who calls for indexation, with a guaranteed higher price, for example 70 euros/MWh, which would remain well below current market prices of 150 or 200 euros. “It will continue to benefit the community anyway,” he said.
Renewable energies remain competitive, a fortiori in the midst of the fossil fuel boom and given “the average prices observed in the last six months in the wholesale electricity markets,” the IEA also stresses. However, it calls on States and industrialists to “act seriously” to “diversify their supply of raw materials”, an imperative highlighted by the crisis with Russia, the world’s second largest producer of aluminium, cobalt, platinum…
“There are still margins to reduce costs”says Mr. Kim: “First, invest in new mining projects. Prices will stabilize only when new supply becomes available.”
The IEA recommends updating geological knowledge, particularly in developing countries. “And there is room to develop projects in the United States, Canada, Latin America…”: as of 2023, new sites should start producing cobalt in the Democratic Republic of the Congo, nickel in Indonesia and Canada, lithium in Australia, copper in Latin America…
“But more will be needed,” says the expert, who adds that manufacturers will also have to innovate to greatly reduce their metal needs.