Early last year, I thought the wind and solar price hikes were a fluke. After all, one of the constants in my decade-plus covering energy was that the prices of wind and solar were in a constant state of decline.
not anymore The trend is unmistakable. Prices are going up, a lot.
But the good news for the wind and solar industries is that their resources remain among the most expensive, largely because all major sources of electricity are also experiencing rising costs. And the Anti-Inflation Act passed in August includes incentives for renewable energy manufacturers to build products in the United States, which could set the stage for a new era of growth in the domestic supply of wind and solar components, and help. reduce prices
This week, we have some new data from LevelTen Energy on the extent of the price increase. The Seattle company, which runs an online marketplace for buyers and sellers of renewable energy, found that bid prices for solar contracts in North America rose 30 percent in the third quarter of 2022 compared to the third quarter of the previous year. Wind contract prices rose 37 percent over the same period.
Gia Clark, senior director of developer services at LevelTen, said the market is being driven by “off-the-charts demand” from companies and governments looking to buy long-term contracts for wind and solar. These contracts, called power purchase agreements, are at the heart of how wind and solar businesses operate.
“The supply just can’t keep up,” he said.
The report’s national dollar figure is an average of $45.93 per megawatt hour, a price that includes wind and solar contract bids, up 34 percent from last year’s third quarter.
In 2018, when the LevelTen report began to be released, that figure was less than $30.
What causes the price increase? I asked Sagar Chopra, a solar industry analyst at research firm Wood Mackenzie.
A major reason, he said, is that solar panels, the biggest expense of most solar projects, have become much more expensive. Earlier this year, solar panels were selling for about 35 cents per watt, on average. Now, that’s about 45 cents, he said, with some projects falling into the 50-cent range.
Chopra attributes this to a long list of factors, starting with US policies, tariffs on solar equipment imports from China and a ban on silicon-based panels linked to human rights abuses in one Chinese region.
The Biden administration issued a two-year moratorium on solar tariffs earlier this year, but the policy originally approved by former President Donald Trump was long enough to affect current prices.
The rise in solar panel prices is happening at the same time that almost every aspect of renewable energy projects is becoming more expensive, from labor to the costs of acquiring land leases.
“Everything has gone up,” Chopra said.
Looking ahead, he expects the costs of solar projects to level off and then last for several years. The good news here is that price increases would slow or stop, but the bad news is that the increases that have already occurred will not go away, at least not for a while.
The most encouraging part of his forecast is what happens around 2025, thanks in large part to the SCA and incentives for companies to manufacture renewable energy parts in the United States.
Even before the bill was passed, solar panel manufacturers were ramping up their manufacturing capacity in this country, partly in response to the tariffs. A notable example is South Korea’s Qcells, which has announced plans to build a second panel factory in Georgia, close to where the company opened in 2019.
It will take several years for companies to respond to the SCA and shift resources to doing more manufacturing in the United States, Chopra said. Once that happens, he foresees a time when the supply of panels will be much higher than today, which should lead to more competition between manufacturers and lower prices.
Meanwhile, developers continue to rapidly build solar and wind projects, despite rising prices. Some buyers of electricity are doing so to meet business targets or government requirements, which means that price fluctuations do not have a significant impact on demand.
Also, it’s important to note that wind and solar price increases are occurring alongside rising costs for all major sources of electricity.
“All the conventional energy resources have gone up through the roof,” Chopra said.
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And all that volatility is ultimately helpful for wind and solar. It underlines the appeal of signing a long-term contract with a wind farm or solar array as a hedge against ongoing price chaos.
But still, it’s rare to see wind and solar price charts going anywhere but down.
Other energy transition stories to consider this week:
Georgia Power’s long-delayed nuclear power plant is closer to coming online: Engineers at Plant Vogtle have begun loading nuclear fuel into the first of two new reactors, a major step toward operating one of the first new nuclear units, Georgia Power said. decades to build in the United States. The new reactors have been delayed for more than five years and their costs have risen to more than $30 trillion, more than double the initial estimate, Drew Kann and Michael E. Kanell report for The Atlanta Journal-Constitution. The new unit should start producing electricity for the grid in early 2023, the company said. “With everything we’ve been through the last few years, to be at this point where we’re refueling is a huge accomplishment,” said Georgia Power President and CEO Chris Womack.
Biden Administration to Hold First Lease Sale for Offshore Wind Development on West Coast: The Department of the Interior said this week it will hold the first sale of offshore wind leases on the West Coast. A bidding process scheduled for Dec. 6 would determine which companies have the right to develop offshore wind farms in five areas off the coast of central and northern California, Reuters reported. The area, if developed as expected, has wind that could generate 4.5 gigawatts of energy, enough to meet the needs of about 1.5 million homes, the government said. The department has already leased many offshore areas on the East Coast, but is just getting started on the West Coast.
How to Spot and Avoid Solar Scammers: Consumer advocates have seen a rise in rooftop solar scams, with companies making claims about financial savings and system performance that companies don’t deliver. One of the warning signs is an offer that claims to offer “free solar panels,” Sarah Bowman reports for The Indianapolis Star. The solution, advocates say, is to treat the purchase of solar panels like any other major expense and shop around with multiple budgets, and look at whether a company has a history of unresolved customer complaints. For more on one of the companies with a troubling history, The Columbus Dispatch’s Erica Thompson reports that Ohio’s attorney general is suing Pink Energy, a North Carolina company that collected hundreds of consumer complaints before going out of business.
Fears grow amid Nevada lithium mining boom: Across Nevada, there are more than 17,000 prospecting claims for lithium, a soft metal sometimes called “white gold” because of its scarcity and importance as a component in EV batteries. The prospect of a mining boom is a concern for some environmental advocates and indigenous groups, Oliver Milman reports for The Guardian. “The clean energy transition cannot be built on dirty mining,” said Lauren Pagel, policy director for the environmental group Earthworks.
Convenience stores and gas stations are ramping up EV charging: The Pilot Company said this summer it is working with General Motors to build 2,000 fast-charging sites for electric vehicles at 500 of the company’s Pilot Flying J travel centers. This is one of the largest examples of convenience store companies adding EV chargers, Brett Dworski reports for Utility Dive. “The EV driver community is growing, and they are our current and future customers,” said John Tully, Pilot’s vice president of strategy and business development. “We wanted to be part of that solution.” Typical charging times would range from 15 minutes to 45 minutes, he said.
Inside Clean Energy is ICN’s weekly newsletter of news and analysis on the energy transition. Send news tips and questions to dan.gearino@insideclimatenews.org.
Dan Gearino
Clean Energy Reporter, Midwest, National Environment Reporting Network
Dan Gearino covers the Midwestern United States as part of ICN’s National Environment Reporting Network. His coverage covers the business side of the clean energy transition and he writes ICN’s Inside Clean Energy newsletter. He came to ICN in 2018 after a nine-year tenure at The Columbus Dispatch, where he covered the energy business. See the article : San diego solar turbines jobs. Before that, he covered politics and business in Iowa and New Hampshire. He grew up in Warren County, Iowa, south of Des Moines, and lives in Columbus, Ohio.
