Brussels' REPowerEU initiative could potentially add 420 GW of solar energy by 2030, but the soaring costs of solar raw materials could become an obstacle to the programme's goals, said global research consultancy Wood Mackenzie.
Photovoltaic panels. Credit: foxbat / Shutterstock
Credit: foxbat / Shutterstock
The firm expects global installations of solar to grow by 8% annually between 2022 and 2031 to more than 3500 GW capacity. It is anticipated that Europe will account for more than 9% - around 331 GW - of installations within that period. Wood Mackenzie says that the REPowerEU initiative has the potential to more than double that number.
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"The global push to phase out fossil fuels and move to cleaner energy sources has driven innovation and policies that have resulted in tremendous cost reduction in the solar PV sector over the last two decades", said Wood Mackenzie senior analyst Theo Theodorou.
"However, last year, a perfect storm of Covid disruptions, rapid recovery in demand from solar installations, fast-increasing freight rates, and high solar raw materials prices have pushed module prices more than 20% higher. Global prices for key raw materials such as polysilicon, silver, aluminium, copper and steel have all reached multiyear highs".
The price of polysilicon, the main feedstock for producing wafers used in crystalline silicon solar cells, has roughly tripled over the past 18 months due to Covid-19 lockdowns and China's energy problems which have led to delays in new capacity coming online.
While new polysilicon production capacity in China could potentially rebalance the market, prices are expected to remain at elevated levels throughout 2022.
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Europe's main producer, Germany's Wacker Chemie, manufactures around 60,000 tonnes of polysilicon annually, the vast majority is exported to China, as Europe does not have the downstream capacity to consume this amount.
In order for the region to use all its current polysilicon production, it would need to up the production of wafers and ingots by a factor of 10, as well as downstream manufacture of solar cells 21-fold, and modules 3-fold, Wood Mackenzie says.
Furthermore, to achieve the goals of the REPowerEU initiative and create a local solar supply chain, current capacities need even more aggressive expansions at 3-times more polysilicon, 20-times more wafers, 42-times more cells, and 6-times more modules.
On top of that, the cost of antireflective ultra-clear glass, the main material used for the front side cover of solar modules, is also likely to rise as a result of the increasing price of natural gas and tin.
Plant materials such as galvanised steel, aluminium and copper have all seen price rises of over 30% since last year and, Mackenzie says there is no way to reduce usage intensity in the short term.
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"Europe is called to transform its energy system in the wake of the Russia/Ukraine war, with the REPowerEU initiative envisioning at least 420 GW of new solar capacity by 2030.
"But as more sanctions are on the way against Russia, and with electricity and fuel prices showing no sign of slowing down, Europe needs to navigate this high price environment and act fast to develop a local solar supply chain to achieve its targets", added Theodorou.
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