Global supply chain squeeze, soaring costs threaten solar energy boom

The sun rises before the inauguration of the Cerro Dominador Solar Power Plant, in Maria Elena, Chile. (Reuters)
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Updated 09 June 2021
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Global supply chain squeeze, soaring costs threaten solar energy boom

  • Soaring shipping freight rates along with higher costs for fuel, copper and labor are also pinching project costs, company executives said

LOS ANGELES: Global solar power developers are slowing down project installations because of a surge in costs for components, labor, and freight as the world economy bounces back from the coronavirus pandemic, according to industry executives and analysts interviewed by Reuters.
The situation suggests slower growth for the zero-emissions solar energy industry at a time world governments are trying to ramp up their efforts to fight climate change, and marks a reversal for the sector after a decade of falling costs.
It also reflects yet another industry shaken up by the supply chain bottlenecks that have developed in the recovery from the coronavirus health crisis, which has businesses from electronics manufacturers to home improvement retailers experiencing huge delays in shipping along with soaring costs.
“The narrative is shifting,” S&P Global Platts clean energy analyst Bruno Brunetti said in an interview, citing the costs inflation.
Among the biggest headwinds for solar is a tripling in prices for steel, a key component in racks that hold solar panels, and polysilicon, the raw material used in panels.
Soaring shipping freight rates along with higher costs for fuel, copper and labor are also pinching project costs, company executives said.
Research firm IHS Markit warned last week that its global solar installation forecast for the year could slide to 156 gigawatts from a current projection of 181 GW if price pressures do not ease.
Wall Street has also punished the sector in recent weeks, sending the MAC Global Solar index down 24 percent this year after it tripled in 2020.
Project developers in the United States, the No. 2 solar market behind China, told Reuters they are struggling to price projects for 2022 given the lack of clarity on how long price spikes will last.
Solar engineering, procurement and construction firm Swinerton Renewable Energy said some of its customers have also put “soft holds” on projects slated to start later this year while they wait to see if prices trend down.
“We’ve just become accustomed to such a low cost energy source,” said George Hershman, Swinerton’s president. “Like anything it’s hard to accept that you’re going to start to pay more.”
Contract prices for solar were already up 15 percent in the United States in the first quarter compared with last year due to higher interconnection and permitting costs, according to a quarterly index by LevelTen Energy.
US panel manufacturer First Solar Inc. told investors in April that congestion at American ports was holding up its module shipments from Asia.
And a US maker of solar mounting systems, Array Technologies Inc, withdrew its forecast for the year last month due to steel and freight costs.
In Europe, some projects that do not have strict timelines for when they need to begin delivering power are being delayed, according to executives and analysts.
“The situation has not resolved itself because prices have stayed high, so those who have capacity to wait are still waiting,” said Jose Nunez, chief financial officer of Spanish solar tracker maker Soltec Power Holdings SA. Nunez said Soltec was seeing project delays in all of the markets it serves.
Supply constraints could put upward pressure on relatively stable European solar prices later this year as companies seek to preserve profit margins that are already razor thin, according to LevelTen.
In China, the world’s top solar product maker, producers are already raising prices to protect margins, leading to slower orders.
According to three solar panel makers in China polled by Reuters, prices for panels are up 20-40 percent in the past year, following the surge in costs for polysilicon, the raw material for solar cells and panels.
“We have to manufacture the product, but on the other hand, if the price is too high, the project developers want to wait,” Jack Xiao, marketing director at BeyondSun Holdings, a panel maker that exports 60 percent of its products, said.
A state-backed solar cell factory manager who asked not to be named told Reuters that output has dropped because customers are reluctant to fulfill orders at current prices.
China’s Canadian Solar Inc, a top panel producer, said last month that its product prices were up 10 percent in the first quarter from the previous three month period, an increase it plans to pass on to customers.
“We will continue to take price up, and we’re willing to give up some volume in order to protect margins,” Yan Zhuang, president of the company’s module making division, said on a conference call with investors last month.


Saudi-China financial markets enter new era with ETFs listed on Chinese bourses: PIF 

Updated 5 sec ago
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Saudi-China financial markets enter new era with ETFs listed on Chinese bourses: PIF 

RIYADH: Saudi Arabia and China’s financial markets will see a new chapter of connectivity with the recent launch of exchange-traded funds on Chinese bourses, according to Public Investment Fund Governor Yasir Al-Rumayyan. 

In a release, Al-Rumayyan stressed that the ETF gives investors in Asia access to the Saudi equity market and its sustainable long-term growth driven by strategic economic transformation. 

Last week, two new ETFs focused on the Kingdom’s stocks debuted in Shanghai and Shenzhen. The feeder funds, operating under the Qualified Domestic Institutional Investor program, began trading on July 16, with both briefly hitting the 10 percent daily limit on their launch day. 

The first fund, CSOP Saudi Arabia ETF QDII, managed by China Southern Asset Management, is listed on the Shenzhen Stock Exchange after raising 634 million Chinese yuan ($87 million).  

The second fund, the Huatai-PineBridge managed CSOP Saudi Arabia ETF QDII, started trading on the Shanghai Stock Exchange after raising 590 million Chinese yuan. 

These new ETFs are among the first batch of funds in China able to invest in the Saudi Arabia stock market. 

PIF aims to attract foreign investors and deepen capital inflows into Saudi Arabia, continuing from the success of the CSOP Saudi Arabia ETF introduced on the Hong Kong Stock Exchange in November 2023. This fund, launched with an initial investment of over $1 billion, including a $500 million contribution from PIF, became the world's largest Saudi Arabian ETF. 


Saudi Arabia launches competition for 5 licenses to boost mineral exploration

Updated 32 min 40 sec ago
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Saudi Arabia launches competition for 5 licenses to boost mineral exploration

RIYADH: Saudi Arabia has unveiled its largest mineralized belts to date, spanning 4,788 sq. km and including five new exploration licenses. 

Three of the permits, which were offered to local and global firms, are reserved for the Jabal Sayid site in Madinah.  

It covers an area of 2,892 sq. km and entails minerals like gold, silver, copper, zinc, and lead, according to a statement issued by the Ministry of Industry and Mineral Resources.  

The remaining two licenses pertain to the Al-Hajjar Site in the Asir region, which encompasses 1,896 sq. km and also includes gold, silver, copper, zinc, and lead. 

This initiative aims to accelerate the exploration and development of Saudi Arabia's mineral resources, valued at SR9.3 trillion ($2.4 trillion).  

This is in line with Saudi Arabia’s ambition to transform mining into a foundational industrial pillar of the country’s economy. It also aligns with the ministry’s goal to further bolster the sector and contribute to ongoing developments under Saudi Vision 2030.    
 


Global electricity demand to grow by 4% in 2024: IEA 

Updated 21 July 2024
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Global electricity demand to grow by 4% in 2024: IEA 

RIYADH: Global electricity demand is expected to rise by around 4 percent this year, up from 2.5 percent in 2023, driven by robust economic growth, according to an analysis.  

In its latest report, the International Energy Agency highlighted that intense heatwaves and the growing adoption of electricity-powered technologies, such as electric vehicles and heat pumps, are driving the increase in global electricity demand. 

Many regions experienced severe heatwaves in the first half of 2024, which heightened electricity needs and strained power grids. May was the hottest month of the year, marking the 12th consecutive month of record-high temperatures. 

India, Mexico, Pakistan, the US, Vietnam, and several other countries experienced severe heatwaves in the first half of the year, leading to surging peak loads due to increased cooling needs. 

“Growth in global electricity demand this year and next is set to be among the fastest in the past two decades, highlighting the growing role of electricity in our economies as well as the impacts of severe heatwaves,” said Keisuke Sadamori, director of Energy Markets and Security at IEA.  

The energy agency added that more households, especially in emerging economies, have started to purchase air conditioners, further driving electricity demand in these regions. 

The IEA also emphasized that adopting higher efficiency standards for air conditioning is crucial to mitigate the impact of increased cooling demand on power systems. 

The report also highlighted that expanding and reinforcing power grids is essential for ensuring a reliable electricity supply. 

The IEA noted that renewables are rapidly advancing globally, with solar photovoltaic set to achieve new records. 

India and China to drive growth 

The energy think tank further noted that this rise in electricity demand growth will be driven by countries like India, China, and the US.  

“We expect this demand trend to continue in 2025, with growth also at 4 percent. In both 2024 and 2025, the rise in the world’s electricity use is projected to be significantly higher than global GDP (gross domestic product) growth of 3.2 percent. In 2022 and 2023, electricity demand grew more slowly than GDP,” the IEA added.  

According to the analysis, electricity demand in China is forecast to increase by 6.5 percent in 2024, similar to its average rate between 2016 and 2019.  

India will witness an 8 percent rise in electricity consumption in 2024, matching its rapid growth in 2023.  

“In the first half of 2024, the country (India) grappled with heatwaves of record duration, with peak load reaching a new high and putting exceptional strains on power systems. Assuming a return to average weather conditions, we expect electricity demand growth in India to ease moderately to 6.8 percent in 2025,” the IEA added.  

The report further highlighted that electricity demand in the US is set to rebound significantly in 2024, increasing by 3 percent year-on-year, driven by a positive economic outlook and the rising need for air conditioning amid severe heatwaves.  

In the EU, demand is expected to increase by 1.7 percent as economic difficulties ease, but uncertainty over the pace of growth remains.  

“EU electricity consumption had contracted over the two previous years, with the decline in output from energy-intensive industries an important driver. Signs of a recovery in EU electricity demand emerged starting in the fourth quarter of 2023,” said the IEA.  

It added: “Growth gained further traction during the first half of 2024 as energy prices stabilized and various industries that had previously curtailed operations restarted.”  

Clean energy sources  

According to the analysis, despite a sharp rise in power consumption, solar PV alone is expected to meet roughly half of the growth in global electricity demand by 2025.  

IEA further noted that global electricity generation from solar PV and wind is expected to surpass that from hydropower in 2024.  

“The global energy transition is set to achieve another significant milestone by 2025, with total renewable generation poised to overtake coal-fired electricity output. The share of renewables in global electricity supply rose to 30 percent in 2023 and is projected to climb further to 35 percent in 2025,” said the IEA.  

Despite the sharp increases in renewables, global power generation from coal is unlikely to decline this year due to the strong growth in demand, especially in China and India.  

The study highlighted that carbon dioxide emissions from the global power sector are plateauing, with a slight increase in 2024 followed by a decline in 2025.  

“It’s encouraging to see clean energy’s share of the electricity mix continuing to rise, but this needs to happen at a much faster rate to meet international energy and climate goals,” said Sadamori.  

He added: “At the same time, it’s crucial to expand and reinforce grids to provide citizens with secure and reliable electricity supply – and to implement higher energy efficiency standards to reduce the impacts of increased cooling demand on power systems.”  

Meanwhile, Fatih Birol, IEA’s executive director, said that the energy industry should urgently reduce its carbon emissions if the world wants to avoid catastrophic climate change in the coming decades, according to a press statement.  

“About 80 percent of emissions that cause climate change come from fossil fuels. This is the reason there is a need to reduce emissions if we want a planet in the future that is like it is today,” Birol told the Al-Attiyah Foundation in a podcast interview.  

He added: ‘This doesn’t mean that tomorrow we will not need fossil fuels, but the share of fossil fuels needs to decline. If we don’t, we will face catastrophic implications like floods, heat waves, and other extreme weather events. Continuing with the current fossil fuel-based energy system is not good news for anybody— producers and consumers alike.”  

In the latest report, the IEA also projected that global nuclear generation is on track to reach a new high in 2025, surpassing its previous record in 2021.  

According to the energy agency, nuclear generation is forecast to rise globally by 1.6 percent in 2024 and by 3.5 percent in 2025, driven by a steady increase in output by the French nuclear power fleet as maintenance works are completed.  

The restarting of reactors in Japan and the arrival of new reactors in various markets, including China, India, Korea, and Europe, support the growth in nuclear power generation globally.  

The report also noted that the rise of artificial intelligence has put the electricity consumption of data centers in focus, making better stocktaking more important than ever. 

“In many regions, historical estimates of data centers’ electricity consumption are hampered by a lack of reliable data. At the same time, future projections include a very wide range of uncertainties related to the pace of deployment, the diverse and expanding applications of AI, and the potential for energy efficiency improvements,” said the IEA.  

It added: “Expanding and improving the collection of electricity demand data from the sector will be crucial to identify past developments correctly and to understand future trends better.”


AlUla participates in global forums to strengthen Saudi-China cultural ties

Updated 21 July 2024
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AlUla participates in global forums to strengthen Saudi-China cultural ties

RIYADH: Saudi Arabia and China have deepened their cultural ties as the Royal Commission for AlUla participated in key global forums in Istanbul and Luoyang.  

The RCU attended the Silk Road Dialogue and the International Ancient Capitals Forum to enhance collaboration and showcase AlUla as the world’s “largest living museum.” 

The events, held from June 27 to 30, underscored AlUla’s prominent role within the International Tourism Alliance of Silk Road Cities, a network connecting 63 destinations across 28 countries along ancient trade routes.  

The forums were instrumental in expanding Saudi-China cultural partnerships and organizing official visits to AlUla. 

Saudi Arabia’s strategic focus on tourism, centered around AlUla’s rich heritage, has become a cornerstone in deepening cultural and economic ties with China, showcasing the Kingdom’s commitment to leveraging its historical assets to foster international partnerships. 

Discussions at the International Ancient Capitals Forum included high-level meetings with Luoyang officials on tourism, agriculture, conservation, and urban development, exploring new areas of cooperation between the two nations. 

“The Royal Commission for AlUla continues to build on the deep-rooted foundations of cultural partnership that exists between China, the Kingdom, and northwest Arabia,” said an RCU spokesperson in a statement. 

The spokesperson added: “The Silk Road Dialogue and International Ancient Capitals Forum events represented exciting opportunities to develop new avenues of collaboration, with a focus on expanding knowledge exchange and promoting tourism, with diverse initiatives built upon our shared status as ancient destinations and rapidly developing landmarks for human heritage.” 

The forum was launched to foster dialogue and collaboration between cities with a millennia-long history. It also facilitates an agreement signed earlier this year between AlUla and its Chinese partners at the Henan Provincial Administration of Cultural Heritage.  

The partnership seeks to enhance knowledge and shared resources, focusing on archeology, preserving cultural heritage and museums and research collaboration as well as talent development, tourism and other cultural exchanges. 

It also includes establishing a technology-driven archeological laboratory, conducting excavation activities, engaging in research and fostering connections between heritage sites in AlUla and Henan. 

The deal further involved implementing collaborative exchange programs, participating in exhibitions and events, and utilizing museum technologies such as virtual reality and augmented reality. 


Saudi government agencies boost emerging tech adoption by 10% in 2024

Updated 52 min 23 sec ago
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Saudi government agencies boost emerging tech adoption by 10% in 2024

RIYADH: Saudi Arabia’s government agencies have made significant progress in integrating new technologies, showing a 10 percent improvement from the previous year, according to an official report.

The Emerging Technology Adoption Readiness Index, which measures the progress of government entities in implementing new solutions, increased from 60.35 percent in 2023 to 70.70 percent in 2024. This improvement is accompanied by a rise in participating agencies, which grew from 13 last year to 35 in 2024, the Saudi Press Agency reported.

The annual report published by the Digital Government Authority underscores the Kingdom’s enhanced capacity for adopting emerging technologies. This progress is a key element of Saudi Arabia’s broader transformation strategy, aimed at leveraging advanced systems to improve services for citizens, residents, and visitors.

This increase in the index highlights the Kingdom’s ongoing commitment to modernizing its digital infrastructure and aligns with its Vision 2030 objectives, emphasizing sustainable development and the advancement of its technological future.

The index helps organizations and policymakers understand their technological advancement and identify areas for growth and development — an essential component of Saudi Arabia’s objectives. 

The report highlighted progress in adopting emerging technologies, with research capability reaching 72.04 percent and communication capability reaching 71.88 percent.     

According to the report, the integration field achieved a score of 67.93 percent, while the proof capability field recorded 70.84 percent, reflecting advanced levels of development. 

Drones have improved aerial photography and real estate imaging, boosting operational efficiency by 80 percent and significantly reducing time and effort. 

Digital twinning has enabled precise asset inventory for 22 out of 36 industrial cities. Additionally, Ameen, the digital human assistant, now serves over 36,000 customers monthly. 

Augmented and virtual reality technologies have further improved digital accessibility for individuals with special needs, expanding their access to digital services. 

The Anaam Shain app has streamlined the secure management of livestock data across the Kingdom, while firefighting robots have reduced physical losses by up to 50 percent. 

In 2023, Saudi Arabia topped the Government Strategy Index for Artificial Intelligence, as ranked by Tortoise Intelligence, which evaluates over 60 countries. 

The country achieved a perfect score of 100 percent on the index criteria, including having a dedicated national AI strategy, a specialized government body for cognitive computing, allocated funding for artificial intelligence, and established and monitored national intelligence system targets.