Solar and wind energy park installation costs have risen considerably, internationally, since early 2021, driven higher by the pandemic’s impact on the global economy, supply chain and labor, unfavorable market developments now exacerbated by the impact of Russia’s ongoing war in Ukraine.
According to a new study conducted by LevelTen Energy, monitoring RES sector transactions worldwide, installation costs last year rose by 28.5 percent in North America and by 27.5 percent in Europe, and have continued rising this year, up 9.7 percent and 8.6 percent, respectively, taking the average RES installation cost to 57 euros per MWh.
These unfavorable developments have wiped out RES sector gains achieved over the past decade or so, during which RES installation costs have fallen.
Steel prices in Europe skyrocketed to 1,650 euros per ton in March, up from 1,100 euros per ton last October, and have since eased slightly to levels of around 1,400 euros per ton.
The increased RES costs come as a challenge to the EU’s objective for major RES growth as a means of achieving climate-change targets and drastically reducing Europe’s reliance on natural gas.
Despite these price increases, the cost of RES-based electricity generation still remains far lower than that of fossil fuel-generated electricity.