Solar PV, wind costs on the rise, but still much cheaper than fossil fuels – report

Globally, renewable energy capacity increased 6% to nearly 295 GW in 2021.

  • Rising commodity and transportation prices are driving up the costs of solar PV and wind turbines, but renewables are even more cost-competitive than fossil fuels.
  • In 2021, the introduction of renewables increased by 6%, despite the increase in costs and supply chain problems linked to the pandemic.
  • Demand for renewables is expected to increase as the EU reduces its dependence on Russia for fossil fuels.

Rising commodity and transportation prices are driving up the costs of solar photovoltaics and wind turbines, but these renewable energy generators are even more cost-competitive than fossil fuels such as coal and gas, according to the ‘International Energy Agency (IEA).

The IEA released its update on the renewable energy market on Wednesday, which also includes outlooks for 2022 and 2023.

The IEA report shows that the roll-out of renewable energy generation capacity increased globally to a new record last year, at 6%, to nearly 295 GW. Most (46%) of renewable energy was used in China, followed by the EU.

The launch of wind capacity decreased by 17%; however, the growth of solar photovoltaics and hydroelectricity has compensated for this. The growth in the uptake of renewable energy has been achieved despite the supply chain problems linked to the pandemic and the “record” prices of raw materials used to produce these plants.

The report notes that commodity prices and transportation costs have risen since the beginning of 2021. By March 2022, the price of steel has increased by 50%, copper has increased by 70% and aluminum has doubled. . Transportation costs were five times higher than in 2021. This means that the prices of wind turbines and solar photovoltaic modules or panels have had to rise, reversing the previous trend of falling prices.

The IEA expects solar PV and wind prices to remain above pre-pandemic levels in 2022 and 2023. “Compared to 2020, we estimate that the overall investment costs of new industrial-scale onshore PV and wind plants are … 15% less 25% more in 2022 “, reads the report.

Rising transportation costs are the main factor in rising wind prices, while increases in solar PV are split equally between transportation and raw material costs. The report notes that the higher prices of fossil fuels – natural gas, oil and coal – used in industrial processes and in the supply of electricity to produce components in renewable energy technologies also drive costs.

Jan Fourie, general manager of Sub-Saharan Africa operations at Scatec, a Norwegian renewable energy developer, previously told Fin24 that capital costs for renewable energy are likely to be driven by higher input costs related to raw materials. .

However, the prices of renewables remain cost-competitive, as the prices of fossil fuels have risen at a much faster rate than that of renewables.

The report also notes that residential and commercial users of solar PV have managed to reduce their electricity bills.

READ | The new round of renewable energy projects could see prices rise

The IEA predicts that renewable energy capacity will increase by 8% in 2022 and reach nearly 320 GW. Solar PV is expected to be the leading technology, accounting for 60% of global renewable capacity.

The IEA noted the importance of policies to support the launch of industrial-scale solar photovoltaic projects, particularly in China and the EU. The prospects for the deployment of renewable energies in 2023 strongly depend on the political environment. The IEA indicated that government-led procurement processes are critical to the expansion of renewable energy.

In South Africa, the government recently launched Offer Window 6 of the Independent Energy Producers Procurement Program of Renewable Energy. Offer window 6 should provide 2 600 MW of power, in addition to that of offer window 5.

The IEA noted that Russia’s invasion of Ukraine has sparked a new urgency in some countries, notably the EU, to secure energy by shifting to clean generation while reducing Russia’s dependence on fossil fuels. .

Russia supplies nearly half (45%) of the EU gas used by industry, households and electricity generation. “With current distribution trends, the expansion of wind and solar PV in the European Union has the potential to significantly reduce dependence on the use of Russian gas in electricity,” the report reads.

“Many European Union countries have announced plans to advance the development of renewable energy, with wind and solar photovoltaics holding the greatest potential to reduce the European Union’s energy sector dependent on Russia by 2023.”


Fourie noted that there is “unprecedented” growth in renewable energy globally. “Renewable energy has been shown to provide energy security at a time of uncertainty. For South Africa, this means it is time for action,” Fourie said.

South Africa is fighting the lack of generation capacity, which could potentially be addressed through the use of renewable energies. Renewable energy industry players, such as Scatec, are willing to deploy much needed capacity that will provide energy security and reduce load shedding.