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Low operating costs make the case for investing in utility-scale renewable projects

 Renewables met 100% of global electricity demand growth during the first
half of 2022. So says the ‘Global Electricity Mid-Year Insights 2022’
from Ember, a global energy think tank. In fact, it says there was a 389
TWh increase in the demand for electricity in the first half of 2022
compared to the first half of 2021, whereas the rise in renewables supply
was actually a bit more – 416TWh.

That’s not surprising given that
renewables are getting so cheap- including in the UK, with wind and solar
the most prolificate new sources across world. However, that in turn may
create a bit of a problem for older renewables, set up under quite
lucrative subsidy schemes, based on now high gas prices, like the
Renewables Obligation in the UK. As I have noted in earlier posts, there is
pressure on them to switch to the more competitive CfD system. Certainly
the RO system is based on adding a subsidy to wholesale gas prices, so
something has to change, since gas prices are now so high. But there are
issues- will every supplier be happy to accept less earnings? They may drag
their feet.

The record-breaking run in power prices, particularly in
Europe, is creating a favorable investment case for solar and wind
projects, making it increasingly compelling to develop renewable assets
purely based on project economics. According to Norwegian consultancy
Rystad Energy, current spot prices in Germany, France, Italy, and the
United Kingdom would all result in payback of 12 months or less.
Considering the average monthly spot prices for August in these countries
were all well over €400/MWh and the relatively low operating costs of
renewables, investing in utility-scale projects appear to be a no-brainer.

 Renew Extra 15th Oct 2022

https://renewextraweekly.blogspot.com/2022/10/renewable-booming-but-windfall-tax.html

October 16, 2022 - Posted by Christina Macpherson | business and costs, renewable, UK