Page 9 - AfrElec Week 19 2022

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Africa, government guarantees or backing to invest in energy-efficiency measures to keep
from development banks for utility-scale solar demand in check and to continue phase-out or
PV, wind and hydropower projects are fuelling phase-down policies for coal and nuclear energy
growth. in several EU member states.
Yet the main worry is that total growth is
expected to plateau in 2023 unless new poli- Costs
cies are implemented rapidly, because solar PV While the report is positive for continued
expansion cannot fully compensate for lower growth, there was a strong cost warning, which
hydropower and steady y/y wind additions. could threaten to hold back green growth and
While solar PV is forecast to break another will require careful government policies to main-
record in 2023, reaching almost 200 GW, and tain momentum.
with the expansion of wind and bioenergy India said at COP26 that it would achieve
remaining stable, 40% lower hydropower addi- Prices for many raw materials and freight costs
tions due to a reduced project pipeline in China have been on an increasing trend since the
stymies capacity growth in the global renewable beginning of 2021. By March 2022, the price of
energy market. PV-grade polysilicon had more than quadru-
It is too early to assess the potential impact pled, steel increased by 50%, copper had risen
on forecasts for 2022 and 2023 of the Russian by 70%, aluminium doubled and freight costs
invasion of Ukraine. The report said that the climbed almost five-fold.
implementation any new policies by government The reversal of the long-term trend of
to boost renewables in response to the war has decreasing costs is reflected in the higher prices
been too slow. of wind turbines and PV modules as manufac-
The report did say that the war in Ukrain- turers pass through increased equipment costs.
ian had reduced the IEA’s forecast for biofuel Compared with 2020, we estimate that the
demand. Increasing feedstock prices pushed overall investment costs of new utility-scale PV
the IEA to revise downwards by 20% its biofuel and onshore wind plants are from 15% to 25%
demand growth forecasts, which now stand at higher in 2022. Surging freight costs are the big-
5% in 2022 and 3% in 2023. gest contributor to overall price increases for
Put simply, Russia’s invasion of Ukraine is onshore wind. For solar PV, the impact is more
putting upward pressure on an already high- evenly divided among elevated prices for freight,
price environment for biofuel feedstocks, in polysilicon and metals.
particular vegetable oils. On the other hand, the rising costs of fossil
The IEA estimated that 100-200 TWh of fuels and electricity have increased at a much
European Union natural gas-based electricity is faster pace since the last quarter of 2021, mean-
provided by Russia. On the other hand, growth ing that renewables can maintain competitive-
in renewable electricity generation is forecast ness despite rising costs.
at 180 TWh from 2021-2023, almost equal to Even the highest-priced onshore wind and
the highest value of Russia dependent gas-fired utility scale contracts signed over the last five
generation. years are half of the average wholesale prices seen
This means that with current deployment today in the European Union. For newly con-
trends, wind and solar PV expansion in the EU tracted projects, despite cost increases, onshore
has the potential to reduce the dependence on wind and solar PV ventures are offering long-
Russian gas use in electricity significantly. term contracts significantly lower than whole-
However, this is not enough to reduce reli- sale price averages over the last six months.™
ance on Russian gas, and Europe will also need

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