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Soaring commodity prices could thwart renewable energy gains, IEA says

By on December 3, 2021 0

According to the International Energy Agency (IEA), the continued rise in commodity and transport prices could lead to cost reductions achieved over the past decade in onshore wind and solar.

Amid pandemic-induced supply chain challenges and construction delays throughout 2020, renewable capacity continued to increase by more than 45% from 2019, “officials said. ‘IEA in its recent report.

However, along with other current supply chain issues, the cost of polysilicon, an ultra-refined form of silicon that is a key ingredient in most solar PV modules, has quadrupled, resulting in higher prices for solar photovoltaic and wind power equipment which can have a downward effect and delay the financing of certain renewable projects already in the pipeline.

“As uncertainty persists over how long commodity prices will continue to rise, the impact of rising material costs on the profitability of the renewable energy industry could have long-term implications for the cost of the clean energy transitions, ”according to the report.

IEA Executive Director Fatih Birol said that despite cost inflation, renewables remain competitive with fossil fuels in most parts of the world due to high fossil fuel prices.

“This year’s record renewable energy additions are another sign that a new global energy economy is emerging,” said Birol. “The high prices of raw materials and energy that we see today pose new challenges for the renewables industry that are even more competitive.

“Wind and solar power give us more reason to be optimistic about our climate goals as they break record after record,” said Birol. “Last year, the increase in renewable capacity accounted for 90% of the expansion of the entire global electricity sector.”

Governments must build on this promising momentum with policies that encourage greater investments in solar and wind power, in the additional grid infrastructure they will need, and in other key renewable technologies such as hydropower, bioenergy and geothermal energy, he said.

“A massive expansion of clean electricity is essential to give the world a chance to meet its net zero goals,” Birol said.

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