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Europe Ramps Up Renewable Capacity Amid War In Ukraine

  • The Ukraine War has had a dramatic impact on Europe’s energy security.
  • The bloc has doubled down on its renewable energy initiatives as a result.
  • Tax breaks included in America’s Inflation Reduction Act, particularly those who manufacture EVs, could place Europe at a disadvantage amid an already serious energy crisis.

Via AG Metal Miner November’s Renewables MMI (Monthly MetalMiner Index) traded sideways for the first time since June. The index rose by 1.56% month-over-month. This primarily resulted from GOES (grain-oriented electrical steel) rising in price. Meanwhile, other renewable energy resources, like neodymium and Japanese steel plate, traded sideways.

Silicon remains in particularly high demand, but supplies remain pinched along with many other metals. Indeed, this prevented the index from rising in price month-over-month. Lower production in China due to zero-COVID policies also slowed down metal production for Chinese imports like solar panels.

All in all, the index remains in a volatile state, despite the sideways movement.

Europe Ramps Up Renewable Energy

The War in Ukraine has so far hindered the global trade of metals across multiple countries. It also led to the circumstances causing Europe’s current energy crisis. In light of this, European nations continue to ramp up investment in other energy sources. With any luck, most countries will soon be able to replace natural gas supplies lost from the Nordstream debacle.

In fact, renewable energy production and resources hit record highs following the start of the War in Ukraine. In particular, solar panels and wind turbines saw a massive influx. Despite this, European governments have spent too much time developing ways to tax these new energy incentives. This has drastically slowed the production of things like solar and wind energy.

Getting past requirements to acquire the proper building permits also hindered efforts to get renewables up and running. And with winter quickly approaching, there are very few days left to spare.   

Inflation Reduction Act Causing Geopolitical Tension for Renewable Energy

With the passing of the Inflation Reduction Act, experts expect renewable energy use to increase across the U.S. In fact, this is already happening. According to reports, U.S. renewable energy initiatives grew by 134% in Q3 alone.

That said, the new legislation comes with a fair bit of conflict. For instance, the European Union fears that the act could discriminate against foreign goods. The World Trade Organization, on the other hand, worries that it could result in a subsidy war. However, the WTO has not directly stated that the act violated WTO regulations and rules.

Related: U.S. Oil Companies Remain Cautious As Economic Headwinds Grow

The German government also expressed concerns over the act and requested a meeting with Washington to resolve the issue. The tax breaks for U.S. manufacturers, particularly those who manufacture EVs, could place Europe at a disadvantage amid an already serious energy crisis.

GOES/Grain Oriented Electrical Steel MMI

November’s Grain-Oriented Electrical Steel MMI (Monthly MetalMiner Index) broke its trend from sideways to vertical. All in all, the index rose 8.05% between October 1st and November 1st. The GOES first began to move sideways instead of forward back in May.

Global demand for GOES (and all electrical steel) remains high. As renewable energy sources like solar panels and wind turbines become more abundant, more and more transformers are needed to carry power from their source to businesses and homes. This mutually beneficial relationship has largely kept the market in good shape.

However, the short-term health of the market remains in question. European GOES producers like ThyssenKrupp will continue to battle the European energy crisis, as will Arnold Magnetic Technology’s European division. With GOES necessary to transfer electricity from one location to another, the market has a distinct shield against unwanted volatility. However, the European energy crisis will continue to challenge the electrical steel market.

By Jennifer Kary

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