The increasing rates of inflation have reflected noticeably on the prices of electricity generated from renewable energy sources in America, and expectations indicate further rises to come.
In light of the high demand for goods, coinciding with the recovery from the Corona pandemic, prices rose, including electricity.
Nevertheless, expectations indicate that the increase in the prices of renewable energy electricity will prompt the search for innovative solutions in this sector, according to PV Magazine.
Electricity Price Hike
Data from the American electricity provider, Level Ten, revealed an increase in the prices of solar and wind electricity in the “BP Press” index; It increased in the fourth quarter of 2021 by 5.9% compared to the third quarter, equivalent to $36.3 per megawatt-hour.
Prices also increased in the same quarter at an annual level – compared to the fourth quarter of 2020 – by 15.7%.
The company – based in the American capital, Washington – indicated that the prices of solar electricity in particular, in the offers of the “BPA” index, by about 5.7%, and amounted to 34.25 per megawatt hour.
These new renewable energy offerings represent the 25 companies on the index.
Cost Increase
Level Ten expected that inflation rates will continue to raise commodity prices; This increases the cost of developing renewable energy projects, and in turn pushes the owners of companies on the BPA index to move prices higher; To recover the investment cost of their projects.
Despite the high prices; Investors and customers continue to accept renewable energy projects and electricity purchase contracts on the BPA Index, driven by several factors; including environmental and social.
According to Level Ten; The data revealed a decline in the rate of ISPs offerings on the index, with the exception of Irkut in Texas, which increased its offerings by 20% on a quarterly basis; The index prices are still among the most competitive in America.
Highest And Lowest
The average price for PPA contracts in the fourth quarter of last year was $75.7 per megawatt-hour in Nesso’s bidding, the highest in the United States.
Prices for BJM were $43.1, SBP $36.7, and Miso $36.1 per megawatt-hour.
While Irkut’s price was the lowest in America, at $28.3 per megawatt-hour.
The BPA is the market indicator for renewable energy contracts for electricity, which are usually long, sometimes with a lifespan of 5-10 years.
Inflation Continues
Gia Clark, Director of Service Development at Level Ten, expected that the renewable energy market will witness a number of changes and innovations during 2022, in light of the continued upward trend in inflation rates.
Clark believes that this situation will continue to put pressure on the supply of projects, electricity and renewable energy, and lead to severe shortages, and this environment will be suitable for those with experience in buying and selling operations.
She added that due to the inability to determine the time of the end of this shortage in the renewable energy market, those responsible for the BPA index will seek to devise new types of contracts for trading, in addition to insurance formulas, and new financing solutions.
Clark believes that innovative financing solutions will reduce risks, and technology companies will introduce new analytics and software.
Retailers can also enter as purchasers of green energy contracts, and the perception of projects will change from just providing clean energy, to a broader picture of providing jobs, benefiting local communities, and reducing damage to the ecosystem, according to Clark.
Wind Turbine Prices
Wind turbine prices have risen globally over the past six months, with steel, copper, aluminum, fiber and logistics costs increasing, according to a recent report by research firm Wood Mackenzie.
The research firm expects global wind turbine prices to rise by up to 10% over the next 12 to 18 months, with increases in commodity prices and logistics costs.
Source: XglobalMarkets
