Renewable power prices soar as demand rises

LOS ANGELES • Prices for wind and solar power in major global markets climbed nearly 30 per cent in a year as developers struggled with chaotic supply chains and surging costs for everything from shipping to parts to labour, according to a report published yesterday.

Contract prices for renewables jumped 28.5 per cent in North America and 27.5 per cent in Europe in the last year, according to a quarterly index by LevelTen Energy that tracks the deals.

In the first quarter alone, prices rose 9.7 per cent in North America and 8.6 per cent in Europe, LevelTen said.

Economic, logistical and labour market disruptions during the Covid-19 pandemic have worsened since the Russian invasion of Ukraine, reversing a decade of cost declines for the renewable energy sector. There is a risk higher costs could slow demand growth at a time when the United Nations has called for clean energy to expand more rapidly to avoid the worst effects of a warming climate.

Aggravating challenges in North America, the sector is unsure whether US lawmakers will extend tax breaks for renewable energy facilities, part of President Joe Biden's climate change agenda.

Developers are also worried about a US Commerce Department probe initiated this year that could result in tariffs on solar panel imports from Asia, pushing up costs.

In Europe, the war in Ukraine has led governments to try to reduce dependence on natural gas from Russia, further boosting robust demand for renewables.

Higher costs for renewables in Europe, along with the continent's aggressive climate policies, should boost the appeal of pricier technologies like green hydrogen and biofuels, according to Raymond James analyst Graham Price.

For now, soaring prices have not slowed demand, LevelTen said. In its poll of 21 sustainability and energy advisers, 75 per cent said their clients have accelerated or maintained procurement plans, according to the report.

REUTERS