One of the keys to the viability of the energy transition is that new sources of electricity are cheaper than old ones, and hopefully cheaper.
It was reasonable to expect that costs would decrease as key components such as solar panels became cheaper over the years.
But as the global economy recovers from the coronavirus pandemic, things have gotten weird. Some materials, such as silicon for solar panels, have faced supply bottlenecks that have pushed up prices. The average global price of solar panels has shown a clear upward trend for the first time in the last 5 years.
The question I ask in 2022 is "how long will it last?"
The answer is now clear: global panel prices have peaked and are now falling. That's good for people buying solar panels, and good for the clean energy transition, although, as I'll explain, the drop in prices hasn't hit the US yet.
"The solar industry is experiencing a price correction as shortages of key components and materials end and become a market for panel buyers," BloombergNEF solar analyst Jenny Chase said in a note to clients.
The global average price by the end of 2021 fell from 23.7 cents per watt earlier this year and a peak of 27.8 cents per watt by the end of 2021 to 19, It was 9 cents.... InfoLink.
One of the reasons for the decline in prices is the resumption of supply and lower prices of silicon, the material that absorbs solar energy on the surface of the panel.
"Polycrimnium demand for 2021 and 2022 was characterized by outstripping supply," Johannes Bernreuter, a market analyst in Germany, said in an email. "High prices have led to (very) high new capacity additions, leading to an oversupply."
Most of the world's silicon comes from factories in China, but the United States and others are working to expand their supply base.
So far I have talked about world prices. Prices in the US are higher, mainly due to tariffs and other trade barriers on solar components from China.
At the same time, the Inflation Reduction Act provides incentives for companies to build clean energy plants in this country. Panel makers responded by saying they would build new factories here, but that it would take time to get up and running.
According to BloombergNEF and PV InfoLink, the average price of a solar panel shipped to the US on June 7 was 38 cents per watt, more than double the global average. The price has been about the same in the US since last fall, a cent or two up or down.
Therefore, the drop in world prices has not yet translated into a drop in prices in the United States.
I asked Chase what IRAs will mean for prices in the near future.
"The IRA subsidizes supply and demand for modules, while various trade barriers make the US a particularly expensive market," he said. "However, domestic supply will only pick up in a year or two, even for modules assembled in the U.S. from overseas cells."
A solar cell is a square sheet about the size of your hand covered in silicon. A solar panel, or module, is a group of solar cells placed next to each other in a glass case and metal frame.
Even if the solar panel is assembled in the US, its cells will likely come from factories in Asia, at least for now. The Biden administration wants to see a clean energy economy where all the parts can be sourced from this country.
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donate nowIt should be clarified that the cost of solar panels is only a part of the cost of building a solar generator, and the cost of all these components varies.
The National Renewable Energy Laboratory said last year that the panels cost about a third of the price of the largest component, a full-scale solar project. The rest are miscellaneous costs for other parts, labor and land, some of which have increased.
LevelTen Energy, which operates in the market for buying and selling renewable energy contracts, reports that prices have risen over the past two years. These are prices that reflect panel costs and all.
It will take time for US global panel prices to fall, and it will take time for the IRA to cover the cost of the project.
But it seems that the period of rising panel prices is over. This is significant given the amount of solar power being built.
In December, the International Energy Agency said the world needs to add three times as much renewable energy as installed solar power in the next five years as it did in the previous 20 years.
Small price changes on this scale, projected at more than 100 gigawatts per year, have big consequences.
Other energy transition stories featured this week:
Energy secretary details thoughts on Air, Gas Act and Energy Department workers: Energy Secretary Jennifer Greenholm told a utility trade group this week that companies should seek financing under the Inflation Reduction Act and that the federal government "has a lot of money for it. Extensive comments at the Edison Electric Institute, It shows how the Biden administration is advancing its clean energy agenda by remaining open to expanding the use of fossil fuels, such as the completion of the Mountain Valley Pipeline in West Virginia.Shelby Webb E. & E News Granholm said the pipeline is necessary for a reliable supply of fuels for power generation, while the administration's 2035- underlines the goal of achieving 100% clean electricity by 2008. All major players in the energy economy .
More companies are setting "net zero" climate goals, but few have concrete plans: The number of public companies with net zero plans has risen to 929, up from 417 at the end of 2020, according to a report by a panel of experts. independent companies. research organizations. As the numbers grow, experts find that business goals are rarely backed by a solid plan, as Frank Jordan writes for the Associated Press. This finding is not surprising, as although many companies have announced emissions targets with expected future dates, they are less likely to take any significant action soon.
Why the U.S. grid isn't ready for the energy transition: The structure of the U.S. grid, built primarily to accommodate coal and gas plants, is becoming a major obstacle in the fight against climate change, according to Nadia Popovich and Brad Plummer. The New York Times writes about it. This story is a good summary of some of the common problems with the design and management of our transmission systems across the country.
States are experimenting with the idea of tying utility revenue to performance: Connecticut is among the states that have implemented a policy of rewarding utilities for performing basic functions like keeping the lights on. Emma Fehringer Merchant for ICN reports that this is a change from the traditional arrangement where utilities pay their own costs and an agreed profit. This new approach, called "performance-based regulation," could play an important role in balancing utilities' financial interests with the need to reduce carbon emissions.
Illinois expands access to chargers to meet electric vehicle goals: The Illinois Environmental Protection Agency has announced grants to fund 368 charging ports at 78 locations across the state, a small step toward meeting the need for affordable charging. Aidali Campo told ICN that charging stations are an important part of making it easier for consumers to buy electric cars, as well as achieving the goal of having 1 million electric cars on the road by 2030. Every state trying to expand the use of electric vehicles faces some version of this problem when deciding where and how to build charging stations, and it will be interesting to see which states have more effective approaches.
Inside Clean Energy is CIE's weekly newsletter featuring news and analysis on the energy transition. Send news suggestions and questions to dan.gearino@insideclimatenews.org .
