RES increasingly expensive, but still profitable

Russia’s invasion of Ukraine triggered a global energy crisis. Many governments are trying to protect consumers from rising energy prices by reducing dependence on Russian supplies and accelerating the switch to renewable energy sources.

As the International Energy Agency (IEA) points out, the renewal of sources is an opportunity to bring down energy prices, even though the construction costs of photovoltaic and wind installations have increased after ten years of decrease. From early 2021 to March 2022, the price of polysilicon has more than quadrupled, steel has increased by 50%, copper by 70%, and the price of aluminum has doubled. In turn, transport costs have almost quintupled. All this translates into the price of wind turbines and photovoltaic modules.

According to the IEA, compared to 2020, total investment costs for new utility-scale solar parks and onshore wind farms are currently between 15 and 25 percent. upper. In the case of onshore wind farms, transmission costs are the most important, and when it comes to photovoltaics, the impact of all cost drivers is more evenly distributed. In 2023, the IEA expects a slight decrease in costs.

Renewable energy sources, however, remain competitive with traditional energy carriers, as the prices of natural gas, oil or coal are rising even faster due to the unrest related to the situation in Eastern Europe. As a result, energy prices are breaking all-time highs. For example, wholesale energy prices in Germany, France, Italy and Spain have on average more than sixfold compared to the 2016-2020 average.

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In 2021, annual capacity increases from renewable sources broke a new record, growing by 6% to almost 295 GW. This year, growth, according to IEA estimates, could amount to 8%, up to 320 GW, while in 2023 it could remain stable.

This year, for 60 percent. the increase in world power will correspond to photovoltaics. 190 GW of capacity will be launched, up 25%. over a year earlier. Two-thirds of new investments in solar farms are large-scale projects.

The new capacity of onshore wind farms will be slightly higher than in 2021 (then they decreased by 32%) and will amount to 80 GW. In turn, the power of offshore wind turbines will drop by 40%. after the exceptional growth last year linked to the withdrawal of internal subsidies for the development of this sector in China. However, compared to 2020, the capacity will double. ‘China is expected to have the largest combined installed offshore wind capacity in the world and will overtake the European Union and the United Kingdom by the end of this year,’ reports the International Energy Agency.

Read more: Green energy is the best way to be independent. Not only from Russia

Unless additional programs to support RES development are implemented in 2023, global capacity increases from renewable sources will remain stable. The IEA estimates that photovoltaics will break a new record, reaching nearly 200 GW of annual growth. The development of wind and bioenergy will remain stable, while the growth of hydroelectricity, due to the decline in the number of projects in China, will decline by 40%.

The Russian invasion of Ukraine has further underscored the need to accelerate the transition to clean energy in order to reduce dependence on imported fossil fuels from Russia. This is especially true of the EU market.

The high price of fossil fuels has improved the cost competitiveness of renewable electricity technology against coal and natural gas-fired power plants. Home and commercial renewable energy installations help consumers reduce their electricity bills. – However, despite their potential, the acceleration of the development of new RES capacities depends to a large extent on a stable political environment ensuring long-term revenue certainty and faster permitting – underlines the IEA. points out that geopolitical and macroeconomic challenges increase uncertainty in the forecast for renewable electricity after 2023.

Monika Borkowska

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