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The sun and the wind have been duking it out since Aesop, and the sun seems to have the upper hand again.
The solar power industry has been on a hot streak. Yet, as the green industry gathers for the Re+ conference in Las Vegas this week, Bloomberg is reporting that worries about the cost of solar projects hang over the entire renewables sector — especially given the dire financial straits of wind energy projects.
Not All Doom And Gloom
According to Bloomberg, the US has seen a 52% jump in domestic solar power since last year, and the Inflation Reduction Act baked in subsidies to keep that curve steep. However, while solar remains a relatively cheap energy source to build, higher interest rates could raise the costs of financing new projects, especially setting up new US manufacturing hubs.
Meanwhile, wind power faces its first real financial crisis as the cost of building wind farms has climbed just as interest rates started to bite. In a sign of how gun-shy developers have become, the UK government reported last week that zero offshore wind developers bid in its most recent auction for renewable energy contracts.
But more than a ray of hope continues to shine for domestic solar, as Stephen Thomas, energy policy expert and emeritus professor at the University of Greenwich, told The Daily Upside:
- A big factor in the rising cost of wind power is the price of materials to make the turbines has gone up. That’s less of a worry with solar panels, which have the added ace-up-their-sleeve of being something regular (if moneyed) consumers can already buy today.
- Thomas added that panels aren’t the most costly part of setting up solar power, but rather the electricals like transformers that go into hooking the house into the grid. “Even if the price of panels goes up, it might not make much difference to solar economics,” Thomas said.
Thomas isn’t overly concerned by rising solar costs. “My overall feeling is this is just typical market behavior, there are shortages which put up the prices, suppliers step in to fill the gap and prices fall, some suppliers go out of business, prices rise and it all starts again.”
Danger, Danger, Low Voltage: If the US is going to step up its domestic solar industry and wean itself off Chinese manufacturing, it’s going to have to think beyond panels. As day turns into night, solar panels need battery storage so the energy they produce when the sun is high doesn’t go to waste and, per Morgan Stanley, the US imports 90% of its battery storage from China. Time to put those Energizer Bunnies to some real work.