Europe has put the speedy growth of renewable energy on the coronary heart of its race to satisfy bold local weather targets and — within the shorter time period — to wean itself off Russian power extra shortly, after Moscow launched its assault on Ukraine.
European Union fee president Ursula von der Leyen just lately emphasised the necessity, telling a convention that renewable power deployment is “not solely good for the local weather; additionally it is good for our independence”. She explicitly added that it was crucial to counter Russian president Vladimir Putin’s use of “fossil fuels as a weapon”.
However snarled provide chains and the rising value of key uncooked supplies at the moment are slowing the deployment of wind and solar energy throughout Europe, simply as it’s wanted most — threatening the continent’s capability to satisfy its bold development targets for the renewables trade.
Henrik Andersen, president of Vestas, a serious wind turbine maker, informed analysts this month that “value inflation, provide chain disruption and Covid-related lockdowns” have been undermining the sector’s development, even because the power disaster underscored “wind energy’s criticality to satisfy each the electrical energy demand, guarantee power provide.”
Prices for key elements for the wind and photo voltaic industries have risen sharply this yr — a part of a broader improve in commodity prices after Russia’s invasion of Ukraine. For instance, the value of polysilicon, a key enter for photo voltaic panels, has tripled since 2021, largely due to a slowdown in manufacturing in China, the place tight Covid-19 restrictions stay in place, in accordance with the Worldwide Power Company.
Costs of metal and aluminium, that are additionally essential for renewable energy initiatives, are up 70 per cent and 40 per cent, respectively, says the IEA.
These surging supplies costs, alongside with dearer transportation and financing, have pushed the prices of wind generators and photo voltaic panels up between 10 and 20 per cent this yr, in accordance with the IEA. And that improve has introduced an finish to a decade-plus run of steep value declines that had helped to drive renewable power’s speedy development.
Now, with prices reversing, the European renewable power trade’s profitability has been undermined, prompting a wave of lay-offs simply appropriately scaling up its capability.
Siemens Gamesa, the third-largest maker of newly put in generators final yr, reported a lack of €1.2bn within the 9 months resulted in June, which was 233 per cent greater than the loss it suffered in the identical interval a yr earlier. It has additionally introduced that it’s slashing 2,900 jobs, or 10 per cent of its world workforce.
Normal Electrical Renewables has additionally just lately introduced job cuts, whereas Vestas has warned that its revenues might be sharply decrease than beforehand thought.
Nonetheless, European policymakers have been boosting their renewable power targets as a part of a broader rethink of the area’s power safety following Moscow’s assault on Ukraine. As EU member states imposed financial sanctions on Russia, it subsequently slashed its flows of fuel to the continent, exposing Europe’s heavy reliance on Russian fossil fuels.
The EU’s REPowerEU plan, rolled out in Could after the Russian invasion, lifted the goal for renewable power within the energy combine from 32 per cent of whole electrical energy technology to 45 per cent, by 2030. This might necessitate a speedy acceleration of latest wind and photo voltaic initiatives throughout Europe — far past what’s presently going down.
However, somewhat than accelerating, new orders for wind generators have fallen sharply, inflicting WindEurope, a commerce physique, to lift the alarm over a possible slowdown in deployment.
It has discovered that new turbine orders totalled simply 2 gigawatts, by way of their capability, within the third quarter this yr — which is down 36 per cent in contrast with the identical quarter the earlier yr.
In line with WindEurope’s information evaluation, the 2 full quarters since Moscow launched its assault on Ukraine in February have been the slowest for brand new turbine orders since 2017.
Whole orders this yr have accounted for simply 7.7GW of energy, far in need of the 39GW of latest wind capability wanted every year to hit the EU’s 2030 goal of 510GW. WindEurope mentioned this was “far off from what Europe wants to achieve its power and local weather targets”.
Along with inflicting development targets to be missed, the provision chain and monetary issues have additionally prompted considerations that Europe’s renewable’s trade might develop overly reliant on Chinese language producers and suppliers — mirroring the reliance on Russian fossil fuels that the continent is attempting to interrupt.
An IEA report over the summer time discovered that the world relied on China for greater than 80 per cent of the provides wanted for photo voltaic panels, and warned that, for some elements, the reliance might rise to 95 per cent by 2025.
Siemens Gamesa chief govt Jochen Eikholt has mentioned that Europe’s wind trade might find yourself in the identical place and has known as on more government support for the sector, together with a quota for European-made provides.
Final yr, Chinese language producers accounted for 53.5 per cent of latest world turbine installations, in accordance with the World Wind Power Council, up from 36.6 per cent in 2018. Eickholt believes there’s now “positively a threat” that the wind turbine trade might come to seem like the photo voltaic panel trade, the place Chinese language producers dominate the market and the provision chain.
Rystad Power, a consultancy, has instructed that surging electrical energy prices caused by the conflict in Ukraine might heighten that threat of counting on China — additional undermining European efforts to construct a homegrown clear power provide chain.
“Excessive energy costs not solely pose a big menace to European decarbonisation efforts however might additionally end in elevated reliance on abroad manufacturing,” Audun Martinsen, Rystad’s head of power service analysis, warned just lately.
“Constructing a dependable home low-carbon provide chain is crucial if the continent goes to stay to its objectives . . . however, as issues stand, that’s in critical jeopardy,” he added.
