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Haley Zaremba

Haley Zaremba

Haley Zaremba is a writer and journalist based in Mexico City. She has extensive experience writing and editing environmental features, travel pieces, local news in the…

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The Renewable Boom Faces A Major Hurdle Despite Record Investments

As the global clean energy revolution has accelerated at a breakneck pace over the last year, the renewable energy industry has encountered some serious growing pains. Earlier this year, the gangbusters green energy revolution of 2020 finally seemed to experience a market correction as previously white-hot stocks finally started to decrease in price. Last month, two major exchange-traded funds which center their portfolios around clean energy investments, Invesco Solar ETF TAN and the Invesco WilderHill Clean Energy ETF PBW, were down 30% and 26% respectively since the beginning of the year. (By comparison, over the course of 2020 TAN increased by almost 234% and PBW shot up more than 202%). 

And this market correction is not the only hurdle for clean energy projects in 2021. The explosive growth of the sector has outpaced the entry of newly qualified candidates to the workforce, causing a “war over talent globally” in the words of clean energy CEO Miguel Stilwell, of the Portuguese renewables firm EDP Renovaveis SA. On top of the heightened competition for qualified employees, the rapid rise of the renewables revolution has also caused demand to outstrip supply for many industry essentials.

Global supply chain squeeze, soaring costs threaten solar energy boom,” a recent Reuters headline proclaimed. Around the world, solar power producers, developers, and installers are slowing down their operations as soaring costs make projects undesirable or untenable. Prices have skyrocketed, not just for labor, but also for components and freight as the global economy gets back on its feet in the wake of the major recession caused by the novel coronavirus pandemic. These newly pricey components include steel, which has tripled in price compared to pre-covid times, as well as sky-high rates for copper and polysilicon, a raw material that is integral to the construction of solar panels. In addition to the skyrocketing prices of these crucial components, it has also become prohibitively expensive to ship these panels and parts of panels. 

The recent uptick in solar installation costs is a surprising reversal to a now decades-long pattern of falling costs for the sector. Just as falling costs have been integral to the increasingly widespread adoption of solar energy technologies, the recent rise in prices threatens to seriously slow down that growth trend of solar power around the world. “Market expectation was that production costs would decline from the second quarter of 2021, dropping module quote prices, but we have seen just the opposite,” solar-focused new outlet PV Tech reported earlier this month.

Related: China’s Oil Imports To Drop After Refinery Margins Near $0

Ironically, this comes at a time when there is more investment and incentive in renewable energies, including solar, than ever before as governments around the world back major green stimulus plans and spending bills that feature clean energy as a key part of the plan to recuperate their domestic post-covid economies and fight climate change.

The research firm IHS Markit has threatened to lower its projections for global solar installations for the year of 2021. If price pressure and industry squeezes stay steady, the firm says that they will lower their standing forecast of 181 gigawatts to 156 gigawatts. This lowered forecast would still represent a 9% growth rate for the industry but is a considerable blow compared to the runaway growth that was expected and which will be necessary to stay on track for global decarbonization goals.

In order to avoid the worst effects of climate change, as a global community, we need to keep the Earth from rising more than 1.5 degrees Celsius above pre-industrial averages, according to the Intergovernmental Panel on Climate Change (IPCC), the premier body of experts on the topic, and the 2015 Paris Agreement on climate change. Meeting this goal will necessitate reaching net-zero greenhouse gas emissions by 2050, a goal that will be all but impossible without urgently and consistently ramping up installation of solar panels and other carbon neutral and renewable energies.

By Haley Zaremba for Oilprice.com

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Leave a comment
  • Mamdouh Salameh on June 16 2021 said:
    There is no doubt that there is a renewable boom particularly solar energy leading to a rising demand for and also rising cost of the ingredients and components needed to maintain this boom such as steel, copper and polysilicon, a raw material that is integral to the construction of solar panels.

    Therefore, a market correction is necessary to slam the brakes on skyrocketing costs which could make the solar projects undesirable or untenable in the future.

    And despite their success, renewables face a real conundrum. On their own, they aren’t capable of satisfying global energy demand because of their intermittent nature. Moreover, global energy transition won’t succeed without major contributions from both natural gas. Furthermore, the global economy will come to an immediate standstill without oil.

    Yet, environmentalists who call for an abrupt end to fossil fuels and a sudden adoption of renewable energy fail to recognize the obvious lack of logic in this. It is not possible in this particular reality to simply ditch fossil fuels for renewable energy in what is called a global energy transition.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • Antonio Sartorini on June 18 2021 said:
    Coupled with the fact that nobody wants to work in renewables:

    Low salaries (lower than a tradesman earns in his home town)
    Unskilled/Semi skilled job
    Working remote for weeks/months at a time away from family
    Companies only pay for poor quality low end accommodation (3 men sharing a room)
    No meals provided
    Long hours
    Repetitive simple work
    No financial rewards
    No promotion prospects and no career path.

    Who in their right mind would leave a well paid job in oil to go in to that industry

Leave a comment




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