Fossil fuel operating costs are chasing rising global energy prices. But Bloomberg reports it also costs more to build wind turbines and solar farms than before. Are renewables going through a rough patch, or is there something more to this? They are close to our heart and we needed to investigate.
A Rough Patch for Renewables After the Pandemic
The cost of operating coal, and natural gas-fired plants accelerated following Russia’s invasion of Ukraine. This dynamic is easy to understand in terms of demand and supply.
However, the corresponding price shift for renewables is down to something else, Bloomberg believes. Because they ascribe it to soaring prices for materials, labor and shipping. And this has reversed the downward trend for the past decade.
However, this time this is not down to the human factor. The root cause is what Bloomberg calls supply chain chaos lingering, as we gingerly depart the pandemic. This they say is behind the rough patch renewables are currently going through.
The net result is construction costs for new onshore wind facilities increased 7% year on year. While fixed-axis solar plant construction climbed 14%. However, Creamer Media’s Engineering News believes new renewables are still 40% cheaper than gas or coal plants.
Moreover, This Is Only a Temporary Setback
Many parts of the world are still at the stage of depending on fossil, while only allowing renewables to scrape the crumbs. Cost is always an important consideration in governments shy of social change. But one the authors of the Bloomberg report has hope.
“These cost hikes mark a rough patch for renewables, but not an inflection point,” says one of Bloomberg’s authors. “We see a return to long-term technology cost decline trajectories, as demand continues to be strong.
Especially as supply-chain pressures ease, and production capacity particularly in China, comes back online,” he adds. Renewable construction is still 40% cheaper, and much, much faster to complete.
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