April 13 – Wind and solar energy prices in major global markets have risen nearly 30% in a year, according to a report published on , as developers struggle with chaotic supply chains and rising costs for everything from shipping to parts through to work, had to struggle Wednesday.
Renewable energy contract prices have risen 28.5% in North America and 27.5% in Europe over the past year, according to a quarterly index by LevelTen Energy, which tracks deals known in the industry as power purchase agreements ( PPAs) are known.
In the first quarter alone, prices rose 9.7% in North America and 8.6% in Europe, according to LevelTen.
The economic, logistical, and labor market disruptions during the coronavirus pandemic have worsened since the Russian invasion of Ukraine, reversing a decade of falling costs for the renewable energy sector.
There is a risk that higher costs could slow demand growth, while the United Nations calls for faster clean energy adoption to avoid the worst effects of global warming.
“We still have to step on the gas here,” Rob Collier, vice president of LevelTen’s energy marketplace, said in an interview.
Challenges in North America are intensifying as the sector is uncertain whether US lawmakers will extend tax breaks for renewable energy plants, which are part of President Joe Biden’s climate change agenda. Developers are also concerned about a US Commerce Department investigation launched this year that could result in tariffs on solar panel imports from Asia and drive up costs.
“There are currently unsolvable problems with our supply chain,” said Reagan Farr, managing director of US solar developer Silicon Ranch, in an interview.
In Europe, the war in Ukraine has prompted governments to reduce reliance on natural gas from Russia, further fueling robust demand for renewable energy.
The war was “the last straw for a market that already has a lot of price tensions,” said Oscar Perez, partner at Spain-based fund manager and renewable energy developer Q-Energy, in an interview.
Higher renewable energy costs in Europe, combined with the continent’s aggressive climate policies, should boost the appeal of more expensive technologies like green hydrogen and biofuels, according to Raymond James analyst Graham Price.
For now, rising prices haven’t curbed demand, LevelTen said. In a survey the company conducted of 21 sustainability and energy consultants, 75% said their clients have accelerated or maintained procurement plans, the report says.
“It’s not about demand,” said Luigi Sacco, head of PPA procurement at Milan-based Falck Renewables. “Demand is there, but supply is struggling a little in several markets.”
One factor attracting buyers to renewable energy is the rising cost of fossil fuels.
“The current alternative to renewable energy generation is gas, and gas prices are up 100% as well,” Farr said. “So you choose your poison.”
reporting from Nichola Groom in Los Angeles and Isla Binnie in Madrid; Editing by David Gregorio