Global increases in the cost of materials, freight, fuel and labor have set prices for new-build wind and solar back to where they were in 2019, according to a new report from BloombergNEF – but the setback for renewables is temporary, while for fossil fuels the cost gap continues to widen.
The BloombergNEF report, published on Thursday, says estimates for the global levelised cost of electricity (LCOE) for utility-scale PV and onshore wind rose to $US45 and $US46 per megawatt-hour (MWh), respectively, in the first half of 2022.
This amounts to a 7% year-on-year rise in the cost of new-build onshore wind and a 14% jump in the cost of building fixed-axis solar, putting prices for the technologies back to levels seen roughly three years ago, in 2019.
BNEF says the cost rises are mostly linked to world-wide increases in the cost of materials, freight, fuel and labor, which in turn are being exacerbated by ongoing lockdowns in key markets like China, challenges in logistics and transportation, trade barriers, and Russia’s invasion of Ukraine.
For instance, shipping rates from Asia – critical for the delivery of solar panels, inverters, batteries and other components – remain five times higher than in 2019, even after falling from their peak in September 2021.