Not only oil and gas, in the last year the prices of solar and wind energy have also risen on the main global markets, essentially the prices of renewable energy: on the other hand, it is precisely renewables that are seen above all by Europe as of a potential solution to free oneself from Vladimir Putin’s yoke, in particular, from dependence on oil and gas made in Russia. But that’s not the only reason for the surge. Wind and solar energy producers have faced the logistical problems that have arisen with the reopening of the economies from the lockdowns previously imposed to stem Covid: the so-called bottlenecks of supply chains, which have raised the costs of shipping the necessary resources to produce energy and, also, labor costs. All this emerges from a report that was published in the last few hours and the content of which was reported by the Reuters news agency.
This is the quarterly index that is drawn up by LevelTen Energy, and which monitors the so-called agreements known as Power Purchase Agreements (PPAs), electricity supply agreements concluded between two parties on a long-term basis.
The report found that renewables contract prices rose 28.5% in North America, and 27.5% in Europe, over the past year. During the first quarter alone, the rise was 9.7% and 8.6% respectively, with problems in supply chains caused by the reopening exacerbated by Russia’s invasion of Ukraine. , on February 24th. Renewable energy prices have thus pointed upwards, reversing the downward trend of the last decade.
The point is that the rally risks throwing away the most ambitious intentions of the West, aimed at severing the umbilical cord that binds energy-consuming countries to Vladimir Putin’s Russia. The higher costs could in fact translate into a slowdown in demand, among other things when the UN has launched an appeal for the world to accelerate the transition to forms of clean energy, in order to avoid the consequent worst of warming. global.
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To complicate the situation, at least in North America, is the fact that the sector has many doubts about the real intention of the American Congress to extend the tax incentives that have been launched for the construction of plants necessary for the production of renewable energy, in as part of President Joe Biden’s climate agenda. The sector also fears that the investigation launched this year by the US Department of Commerce could result in the imposition of tariffs on solar panels that are imported from Asia, driving up costs further. “Right now there are practically difficult problems to manage with our supply chain,” Reagan Farr, CEO of solar energy producer Silicon Ranch, admitted to Reuters. In Europe, the war in Ukraine has itself driven demand for renewables, in the wake of various governments’ intentions to end Russia’s dependence on gas.
But for a sector where prices were already rising, the war was “the last straw that broke the camel’s back, as there was already a lot of tension on prices”, explained Oscar Perez, partner of Q-Energy. a company that has been operating in the Energy Services sector for years, helping companies and public and private entities to better manage their energy resources, increasing their efficiency and decreasing their environmental impact (as explained by Web Elettronica on the site).
Raymond James, an analyst at Graham Price, then points out that the higher costs in Europe of renewables, combined with the decidedly ambitious European climate policies, should increase the attractiveness of more expensive technologies, such as those for the development ofgreen hydrogen and biofuels.
Not for nothing, in the case of Italy, it was Prime Minister Mario Draghi himself, speaking in Algiers at the end of the meeting with the President of Algeria, Abdelmadjid Tebboune, who made the following announcement: “Italy is ready to work with Algeria to develop renewable energy and green hydrogen, we want to accelerate the energy transition and create opportunities for development and employment. The government wants to defend Italian citizens and businesses from the consequences of the conflict ”.
For now, LevelTen reassures, the jump in prices has not slowed demand. Indeed, from a survey that the company launched, interviewing 21 energy and sustainability consultants, it emerged that 75% of those interviewed reported that their customers have accelerated or otherwise confirmed their energy supply plans. “It’s not about demand – explained Luigi Sacco, head of PPA origination at Falck Renewables – The demand is there but it is the supply that is struggling a bit in various markets”. One factor that is leading buyers to focus more and more on renewables is, of course, the boom in fossil fuel costs.
“The ready alternative to renewable energy generation right now is gas, and gas prices are up 100%. So choose your poison, ”commented Farr (CEO of solar energy producer Silicon Ranch).