Reading Time: 2 minutes
Rising renewable energy commodity prices will increase the costs of developing new green power plants, but this will be compensated by better access to capital and scale economies, according to policy experts and an investor.
Last week at Reuters Global Markets Forum, they said that the long-term threat to clean energy’s economic sustainability is neither the rising prices nor the supply chain issues for some of the commodities and items required for green projects.
Overhead expenditures that will be reduced as a result of economies of scale include permit fees, labour costs for the purposes of installations, and client acquisition costs.
Vaibhav Chaturvedi, a fellow at the Council on Energy, Environment, and Water, sees “greenflation,” or the costs of turning green, as a challenge, particularly for the achievement of short-term goals.
“Underlying commodity prices are rising everywhere in the world,” Chaturvedi further added.
The statement is proved to be true as the prices for metals such as tin, copper, aluminium, and nickel, cobalt, which are required for energy transition technologies, have climbed by 20% to 91% this year.
However, Chaturvedi regarded decreasing financing costs as significant leverage to offset the elevation in underlying expenses.
The statement is further supported by, Managing Director for Green Economy and Climate Action at the European Bank for Reconstruction and Development, Harry Boyd Carpenter, who added that because there will be minimal hurdles to scaling up in the future, the industry’s overall costs will trend downward.
In accordance with Allied Market Research, the worldwide renewable energy market will more than double to over US$2 trillion by 2030, from more than US$881 billion (S$1.2 trillion) in 2020.
According to Gauri Singh, deputy director-general of the International Renewable Energy Agency, despite inflation and supply chain interruptions, lower finance costs contributed to a record output of 260 gigatonnes of renewable energy last year.
You will not be able to get a good deal on something that poses a climate danger. Whereas the market for renewables is softening, Singh further stated.