Global supply chain squeeze, soaring costs threaten solar energy boom

[IsailedawayfromFR]

Global solar power developers are slowing down project installations because of a surge in costs for components, labor, and freight as the world economy bounces back from the coronavirus pandemic, according to industry executives and analysts interviewed by Reuters.

The situation suggests slower growth for the zero-emissions solar energy industry at a time world governments are trying to ramp up their efforts to fight climate change, and marks a reversal for the sector after a decade of falling costs.

It also reflects yet another industry shaken up by the supply chain bottlenecks that have developed in the recovery from the coronavirus health crisis, which has businesses from electronics manufacturers to home improvement retailers experiencing huge delays in shipping along with soaring costs.

"The narrative is shifting," S&P Global Platts clean energy analyst Bruno Brunetti said in an interview, citing the costs inflation.

Among the biggest headwinds for solar is a tripling in prices for steel, a key component in racks that hold solar panels, and polysilicon, the raw material used in panels.

Soaring shipping freight rates along with higher costs for fuel, copper and labor are also pinching project costs, company executives said.

Research firm IHS Markit warned last week that its global solar installation forecast for the year could slide to 156 gigawatts from a current projection of 181 GW if price pressures do not ease.

Wall Street has also punished the sector in recent weeks, sending the MAC Global Solar index (.SUNIDX) down 24% this year after it tripled in 2020.
https://www.reuters.com/business/sustainable-business/global-supply-chain-squeeze-soaring-costs-threaten-solar-energy-boom-2021-06-09/

Weren't we continually told for years that the cost of renewables is coming down?

[thackney]

Weren't we continually told for years that the cost of renewables is coming down?

The cost of essentially all building materials is skyrocketing this year. 

[IsailedawayfromFR]

The cost of essentially all building materials is skyrocketing this year.

Yet we got this crap from Biden just 10 weeks ago.


U.S. pledges to slash solar energy costs by 60% in a decade
https://www.gopbriefingroom.com/index.php/topic,432420.msg2401806.html#msg2401806

[thackney]

Yet we got this crap from Biden just 10 weeks ago.


U.S. pledges to slash solar energy costs by 60% in a decade
https://www.gopbriefingroom.com/index.php/topic,432420.msg2401806.html#msg2401806

But that is about subsidies, not real reductions of true cost.

[IsailedawayfromFR]

But that is about subsidies, not real reductions of true cost.

This was contained within the article.  I call it crap.

The cost of generating power from the sun has dropped more than 80% in the last decade, making it competitive with plants powered by fossil fuels like coal and natural gas. Solar energy now accounts for the largest share of annual new generating capacity in the United States, according to government data.

[thackney]

This was contained within the article.  I call it crap.

The cost of generating power from the sun has dropped more than 80% in the last decade, making it competitive with plants powered by fossil fuels like coal and natural gas. Solar energy now accounts for the largest share of annual new generating capacity in the United States, according to government data.

The cost of generating by solar has dropped but is only competitive with tax payer subsidies.

Notice the qualifying statement of capacity, not actual MW generated.  Same game with wind.

[HoustonSam]

The cost of generating power from the sun has dropped more than 80% in the last decade, making it competitive with plants powered by fossil fuels like coal and natural gas. Solar energy now accounts for the largest share of annual new generating capacity in the United States, according to government data.

My understanding is that these sorts of comparisons are generally for the pure variable cost of generating a kWH of electricity, but do not include the higher capital investment requirements that come from "renewables" being intermittent.

Stated more clearly, when solar is operating for an hour perhaps it can generate power at a direct variable cost competitive with a fossil fuel plant operating for an hour.  But solar only produces when the sun is shining.  So assume (generously) it produces half the time; during that operating period it has to produce twice as much power as demanded by its downstream customers, and that extra power must be stored, to supply power during the half the time it is not producing.

Consequently a "renewable" energy source has to be built to significantly greater capacity than peak demand, and with significant energy storage capacity; neither requirement exists for fossil-fuel-generated power.  The additional capital costs relegate "renewables" back to a severely disadvantaged cost position compared to fossil-fuel-generated power, but a pure-variable-cost comparison hides that reality.

As always, I stand to be corrected by our resident Professors of Thermodynamics @thackney and @Joe Wooten .

[thackney]

My understanding is that these sorts of comparisons are generally for the pure variable cost of generating a kWH of electricity, but do not include the higher capital investment requirements that come from "renewables" being intermittent.

Stated more clearly, when solar is operating for an hour perhaps it can generate power at a direct variable cost competitive with a fossil fuel plant operating for an hour.  But solar only produces when the sun is shining.  So assume (generously) it produces half the time; during that operating period it has to produce twice as much power as demanded by its downstream customers, and that extra power must be stored, to supply power during the half the time it is not producing.

Consequently a "renewable" energy source has to be built to significantly greater capacity than peak demand, and with significant energy storage capacity; neither requirement exists for fossil-fuel-generated power.  The additional capital costs relegate "renewables" back to a severely disadvantaged cost position compared to fossil-fuel-generated power, but a pure-variable-cost comparison hides that reality.

As always, I stand to be corrected by our resident Professors of Thermodynamics @thackney and @Joe Wooten .

@SamHouston

They do include the cost to build and to operate.  They also include the tax payer subsidies.

https://www.eia.gov/outlooks/aeo/electricity/sub-topic-04.php

[HoustonSam]

@SamHouston

They do include the cost to build and to operate.  They also include the tax payer subsidies.

https://www.eia.gov/outlooks/aeo/electricity/sub-topic-04.php

Many thanks @thackney , as always this is good education which will require some "soak time" for me to digest and understand.

As I reflect on this further I don't see how the pure variable operating costs of solar (few to no moving parts, no fuel expense) could be similar to those for fossil fuel (significant mechanical complexity and fuel expense), so perhaps I've misinterpreted some of the things I've read.

At any rate the conclusion is that "renewables" are competitive only with subsidies, which means they actually aren't competitive.

[BassWrangler]

The cost of essentially all building materials is skyrocketing this year.

It's not just building materials. There are *massive* supply issues with semiconductors going on right now. It's going to be a big deal as the ripples from this expand out into various industries.

Make sure you contact your congress-critters and urge them to support the CHIPS for America act. It's vital for national security and many other reasons that we have the ability to manufacture integrated circuits in the US.

[thackney]

Many thanks @thackney , as always this is good education which will require some "soak time" for me to digest and understand.

As I reflect on this further I don't see how the pure variable operating costs of solar (few to no moving parts, no fuel expense) could be similar to those for fossil fuel (significant mechanical complexity and fuel expense), so perhaps I've misinterpreted some of the things I've read.

At any rate the conclusion is that "renewables" are competitive only with subsidies, which means they actually aren't competitive.

@HoustonSam

This is the current chart I was trying to find.  To me, it explains better than the previous link.

Capacity factor makes a huge difference.



https://www.eia.gov/outlooks/aeo/pdf/electricity_generation.pdf

[HoustonSam]

This is the current chart I was trying to find.  To me, it explains better than the previous link.
Capacity factor makes a huge difference.

Thanks, this is a very helpful analysis.

I believe this says that "Wind, onshore" and "Solar, standalone" are competitive with "Combined cycle" before tax credits even including the lower capacity factor, as shown in the column headed "Total System LCOE or LCOS."

But I would expect that extremely expensive "Battery storage" to add to the total cost of any non-dispatchable technology in order to deliver on-demand power, so simply reading up and down the "Total System LCOE or LCOS" column does not fully explain the entire comparison of "renewable" to fossil fuel energy generation; is that correct?

[thackney]

Thanks, this is a very helpful analysis.

I believe this says that "Wind, onshore" and "Solar, standalone" are competitive with "Combined cycle" before tax credits even including the lower capacity factor, as shown in the column headed "Total System LCOE or LCOS."

Correct.  That is what they show.

But I would expect that extremely expensive "Battery storage" to add to the total cost of any non-dispatchable technology in order to deliver on-demand power, so simply reading up and down the "Total System LCOE or LCOS" column does not fully explain the entire comparison of "renewable" to fossil fuel energy generation; is that correct?

The wind or solar typical uses no battery system.  They produce when they can and do not when they cannot.  When they exist as a small portion of the total generation, the swings are compensated in changes of spinning reserve and the like, such as varying output of the combined cycles between 90~95% full capacity as an example.

Now battery systems are being installed as complete stand alone facilities attached to the grid.  They are competing with the Nat Gas peaker units, listed above as combustion turbine (power turbines with no heat recovery).

[IsailedawayfromFR]

But that is about subsidies, not real reductions of true cost.

Are you saying that subisidies will be cut 60%?

It says there will be a 60% reduction in solar costs with new technologies.

[thackney]

Are you saying that subisidies will be cut 60%?

I am not sure how you made that leap.  Please point out what I said that made you believe that is what I meant.

It says there will be a 60% reduction in solar costs with new technologies.

Actually it says:

The Biden administration on Thursday set a goal to cut the cost of solar energy by 60% over the next decade...

You know, like you can keep your doctor, health costs won't go up, and a chicken in every pot.

[IsailedawayfromFR]

I am not sure how you made that leap.  Please point out what I said that made you believe that is what I meant.

https://www.gopbriefingroom.com/index.php/topic,439536.msg2443883.html#msg2443883

[thackney]

@IsailedawayfromFR

???  I said nothing about cutting subsidies.  The article you linked to is about government trying to reduce costs; I read that to mean subsidies.

I think subsidies of Solar will go up, not down.  At least under the Biden admin and the current congress.

[IsailedawayfromFR]

@IsailedawayfromFR

???  I said nothing about cutting subsidies.  The article you linked to is about government trying to reduce costs; I read that to mean subsidies.

I think subsidies of Solar will go up, not down.  At least under the Biden admin and the current congress.

Here's the entire article.   It says it will cut solar costs 60% through supplying subsidies.

The Biden administration on Thursday set a goal to cut the cost of solar energy by 60% over the next decade as part of an ambitious plan to decarbonize the United States’ power sector by 2035.

The U.S. Department of Energy said the goal accelerates its previous utility-scale solar cost target by five years. For the U.S. power grid to run entirely on clean energy within 15 years, a key pillar of President Joe Biden’s climate change agenda, solar energy will need to be installed as much as five times faster than it is today, DOE said.

To get there, the agency committed to spending $128 million on technologies including perovskite solar cells, which are regarded as a promising cheap alternative to the silicon cells that dominate the market. Funds will also support research on cadmium telluride and concentrating solar technologies.

Part of the funding will also seek to extend the lifetime of existing photovoltaic solar plants by improving components like inverters, cables and racks.

“This first burst of funding will help us add even more affordable clean energy to the grid, jobs to communities across the country, and will put us on the fast track toward President Biden’s goal of 100% clean electricity by 2035,” Energy Secretary Jennifer Granholm said in a statement.

The cost of generating power from the sun has dropped more than 80% in the last decade, making it competitive with plants powered by fossil fuels like coal and natural gas. Solar energy now accounts for the largest share of annual new generating capacity in the United States, according to government data.

DOE has set ambitious targets for solar in the past. In 2017, the agency said the cost had hit its goal three years ahead of schedule due to a drop in the cost of solar panels tied to expanded production in China.

[thackney]

Here's the entire article.   It says it will cut solar costs 60% through supplying subsidies.

Sounds like we agree.  Cheers!