The record pace of renewables additions is “yet another sign that a new global energy economy is emerging,” said IEA executive director Fatih Birol.
But he added that the high commodity and energy prices prevalent today pose new challenges for the industry, even as elevated fossil fuel prices also make renewables more competitive.
The cost pressures are becoming evident in rising prices for key materials used to make solar panels and wind turbines, Since the start of 2020, prices for PV-grade polysilicon have more than quadrupled, while steel prices are up by 50 per cent, aluminium by 80 per cent and copper by 60 per cent. Freight fees have surged six-fold, the IEA said, adding further stress.
Grid connection delays
Overall, compared with commodity prices in 2019, investment costs for utility-scale solar PV and onshore wind are up 25 per cent, estimates the IEA, warning that about 100GW of contracted renewables capacity risks being delayed by commodity price shocks.
In Australia, renewables capacity is forecast to grow by nearly 30GW, or 75 per cent, by 2026 under the IEA’s base case scenario.
The agency has revised its forecast for Australian growth up by more than 25 per cent from last year, due to network upgrades and state government policies setting up renewable energy zones for large-scale projects.
“However, until these improvements are realised, grid integration challenges remain, leading to increased interconnection lead times and high volumes of curtailment,” it said.
The IEA noted that Australia’s net zero road map for reaching carbon neutrality by 2050 “includes a heavy reliance on energy technologies, including ‘ultra-low-cost’ solar PV”.
Australian photovoltaics expert Professor Martin Green still expects the federal government’s stretch goal for ultra-cheap solar to be reached early despite the recent cost disruptions that have interrupted the falling cost trend.
The IEA forecasts distributed solar – PV rooftop solar – will provide almost half of Australia’s growth, adding almost 14GW in the next five years, although is anticipating a slowdown due to new rules allowing distributors to charge households for sending power to the grid.
More than 7GW of capacity is expected to be added in each of utility-scale solar PV and onshore wind by 2026, driven mostly by state renewables auctions and power purchase contracts. However, the IEA noted that grid connection delays have stretched out project timelines and developers have “self-curtailed” existing projects to avoid penalties.
In the IEA’s accelerated scenario, renewables additions could be almost 30 per cent higher in Australia, but that would require increased grid investment.
Australia’s ambitions for hydrogen – only just behind the European Union’s in terms of its pipeline of projects – could add “substantial capacity” towards 2026, it added.
Source: https://www.afr.com/companies/energy/cost-threat-to-solar-powerhouse-20211201-p59dpw