The era of cheap renewable energy stops
Ive here. On the one hand, it’s easy to frame OilPrice as not necessarily being fair to renewables. On the other hand, we have been warning that “clean energy” is contradictory for some time now. There are other environmental costs of low-carbon/carbon-free sources, such as the use of environmentally harmful inputs such as rare earths and lithium. On top of that, some of them also face supply constraints, such as not the type of supply chain, but the question of how much can be mined or recovered at an acceptable cost.
By: Irina Slav, a writer for Oilprice.com with over a decade of writing experience in the oil and gas industry.Originally Posted in oil price
- Shortages of raw materials, especially metals and minerals and polysilicon, are affecting the renewable energy industry
- Costs of solar panels, wind turbines and electric car batteries are climbing after years of decline
- The price of solar panels has surged by more than 50% in the past 12 months alone.Wind turbine prices rise 13%, battery prices rise for the first time
The continued decline in production costs for wind, solar and electric vehicle batteries has been touted as a driver of their increasing adoption and eventual takeover of the global grid. Until two years ago, nothing else was on the table — although inflation was as real then as it is now. Only now, it becomes more obvious.
in recent metals and mining Meeting In Riyadh, several participants noted that mining has fallen out of favor with lenders because it is considered as damaging to the environment as oil and gas. Now, however, it is very clear that without mining, no real energy transition will be possible. Solar panels, wind turbines, transmission lines and electric vehicles all depend on metals and minerals in sufficient quantities.
However, there are already problems with these numbers. During the pandemic, supply chain disruption — which seems to be one of the most popular phrases in the pandemic — wreaked havoc across the industry, leading to shortages of various raw materials, especially metals, minerals and polysilicon.
Shortages often lead to higher prices, which is exactly what happened here. As a result, the cost of solar panels, wind turbines and electric vehicle batteries has begun to climb — a development few renewable energy forecasters anticipated.
Bloomberg reported this month that solar panel prices have surged more than 50% in the past 12 months alone.Wind turbine prices rise 13%, battery prices rise for the first time, report says famous.
Of course, all of these can be considered temporary glitches due to those pesky supply chain disruptions. Once these are dealt with, prices should return to normal. Unfortunately, this argument doesn’t hold up because demand forecasts for all those metals and minerals known as critical are always bullish precisely because the energy transition depends on them. In other words, the world will need massive amounts of copper, lithium, nickel, manganese and cobalt, among others, to continue the energy transition. And they didn’t come quickly.
Lending problems in the mining industry and an oversupply in some areas of the metals market have led to a decline in investment in new mines in recent years. This adds to the already existing problem of declining ore grades: For example, miners need to dig more ore to find the same amount of copper than they did 20 years ago.
This means that even if demand does not increase, the cost of mining a ton of copper will become higher. With demand forecasts rising, the outlook for copper and other key metals is certainly bullish. But a bullish copper outlook means higher prices for windmills and solar farms, as well as electric vehicles.
And that’s not all, because there’s also the issue of new supply. Banks are definitely more interested in investing in mining now, investing in those critical metals and minerals, but their shareholders and governments insist on mining those metals and minerals responsibly, i.e. complying with certain ESG requirements.recent Report By Metal Bulletin notes that automakers are now scrutinizing their mineral suppliers to ensure they mine responsibly. This also adds more extra cost.
And that’s not all, as new supplies of metals and minerals are critical to the energy transition. One of the key features of the mining industry is long lead times. There is no other way. Even with the most modern technology, it would take about a decade to convert a potential deposit into a working mine. Taken together, the current trend of rising prices in the low-carbon energy sector is likely just the beginning of a broad rebound that could last for decades.