BLOG 10- 30 REASONS WHY RENEWABLE ENERGIES (PHOTOVOTLAIC AND WIND) DON’T ALWAYS LOWER ELECTRICITY PRICES

…continued from Blog N°9

6. Market Dynamics:

• • The transition to renewable energy can disrupt traditional energy markets, leading to temporary price increases as markets adjust.
  • When conventional technology assets leave the markets, they operate in, they leave a hole. If the hole is not rapidly filled, assuming demand remain steady, supply will decrease forcing electricity prices upwards. This is plain economics of supply and demand.

7. Regulatory and Policy Factors:

• • Regulatory frameworks and policies designed to encourage renewable energy adoption can impose additional costs on utilities, which are often passed on to consumers.
  • This includes RPS (Renewable Portfolio Standards)., FiTs (Feed-in Tariffs), subsidies and incentives, Grid Modernization Requirements, Net Metering Policies, Environmental and Siting Regulations, Interconnection Standards, Decommissioning and Recycling Regulations, Local Content Requirements, Capacity Market Mechanisms, Social and Community Benefit Programs, Rate Design and Cost Allocation, Compliance with Renewable Energy Certificates (RECs), and Regulatory Uncertainty.

8. Grid Management Costs:

• • Managing a grid with a high proportion of renewable energy requires sophisticated technology and systems to ensure stability and reliability, adding to operational costs.

9. Supply Chain Issues:

• • The supply chain for renewable energy components can be volatile, leading to increased costs for materials and equipment.
  • This may include constructing projects in locations far from ports, or material arrival locations, leading to an incorrect assessment of the total investment costs.
  • The logistics volatility costs caused by the Corona virus within year 2020 and 2022 not only hurt the investors, but strongly hit all equipment manufacturers, suppliers, and logistics companies. These had contractually agreed a fixed price for transportation and were suddenly faced with unsustainable increases.   

10. Economies of Scale:

• • Renewable energy technologies are not yet at the scale where they can benefit fully from economies of scale, keeping prices higher than they might be in the future.
  • Manufacturing competition has soured whilst materials are scarcer and of less mineral value.  Thus, the main components required to produce the technology to build renewable energy projects has not actually decreased as it could have.

…continued Blog N°11