RIYADH: Prices for wind and solar power in major global markets have climbed nearly 30 percent in a year as developers have struggled with chaotic supply chains and surging costs for everything from shipping to parts to labor, according to a report published on Wednesday.
Contract prices for renewables jumped 28.5 percent in North America and 27.5 percent in Europe in the last year, according to a quarterly index by LevelTen Energy that tracks the deals, known in the industry as power purchase agreements (PPAs).
In the first quarter alone, prices rose 9.7 percent in North America and 8.6 percent in Europe, LevelTen said.
Economic, logistical and labor market disruptions during the coronavirus pandemic have worsened since the Russian invasion of Ukraine, reversing a decade of cost declines for the renewable energy sector.
There is a risk higher costs could slow demand growth at a time when the United Nations has called for clean energy to expand more rapidly to avoid the worst effects of a warming climate.
“We still need keep the foot on the gas here,” Rob Collier, vice president of LevelTen’s energy marketplace, said in an interview.
Aggravating challenges in North America, the sector is uncertain whether US lawmakers will extend tax breaks for renewable energy facilities, part of President Joe Biden’s climate change agenda. Developers also are worried about a US Commerce Department investigation initiated this year that could result in tariffs on solar panel imports from Asia, pushing up costs.
“There’s just intractable problems right now with our supply chain,” Reagan Farr, chief executive of US solar developer Silicon Ranch, said in an interview.
In Europe, the war in Ukraine has led governments to try to reduce dependence on natural gas from Russia, further boosting robust demand for renewables.
The war has been “the last straw for a market where there was already a lot of price tension,” Oscar Perez, a partner at Spain-based fund manager and renewable energy developer Q-Energy, said in an interview.
Higher costs for renewables in Europe, along with the continent’s aggressive climate policies, should boost the appeal of pricier technologies like green hydrogen and biofuels, according to Raymond James analyst Graham Price.
For now, soaring prices have not slowed demand, LevelTen said. In a poll the company conducted of 21 sustainability and energy advisers, 75 percent said their clients have accelerated or maintained procurement plans, according to the report.
“It’s not about demand,” Luigi Sacco, head of PPA origination at Milan-based Falck Renewables, said. “Demand is there but supply is struggling a bit in several markets.”
One factor luring buyers to renewables is the soaring cost of fossil fuels.
“The ready alternative to renewable generation right now is gas, and gas prices are up 100 percent as well,” Farr said. “So you pick your poison.”
Global renewable power prices soar on heavy demand, chaotic supply chain
https://arab.news/ypkc8
Global renewable power prices soar on heavy demand, chaotic supply chain
Saudi ports brace for cargo surge as shipping lines reroute
RIYADH: Preliminary estimates suggest that several global shipping lines could reroute part of their operations to Saudi Arabia’s Red Sea ports, potentially adding 250,000 containers and 70,000 vehicles per month, according to Rayan Qutub, head of the Logistics Council at the Jeddah Chamber of Commerce, in an interview with Al-Eqtisadiah.
“Any disruption in the Strait of Hormuz not only affects maritime traffic in the Arabian Gulf but could also reshape global trade routes,” Qutub said, highlighting the strait’s status as one of the world’s most critical maritime chokepoints for energy and goods transport.
With rising regional tensions, international shipping companies are reassessing their routes, adjusting shipping lines, or exploring alternative sea lanes. This signals that the current challenges extend beyond the Arabian Gulf, impacting the global supply chain as a whole.
Limited impact on US, European shipments
The effects of these developments will not be uniform across trade routes. Qutub noted that goods from China and India, which rely heavily on routes through the Arabian Gulf, are most vulnerable to disruption. In contrast, shipments from Europe and the US typically traverse western maritime routes via the Suez Canal and the Red Sea, making them less susceptible to regional disturbances.
Saudi Arabia’s strategic location, he emphasized, strengthens the resilience of regional trade. The Kingdom operates an integrated network of Red Sea ports — including Jeddah, Rabigh, Yanbu, and Neom — that have benefited from substantial infrastructure upgrades and technological enhancements in recent years, boosting their capacity to absorb increased cargo volumes.
Red Sea bookings
Several major carriers, including MSC, CMA CGM, and Maersk, have already opened bookings to Saudi Red Sea ports, signaling a shift in operational focus to these strategically positioned hubs.
However, Qutub warned that rerouted shipments could increase sailing times. Cargo from Asia, which normally takes 30-45 days, might now require longer voyages via the Cape of Good Hope and the Mediterranean, potentially extending transit to 60-75 days in some cases.
These changes are also reflected in rising shipping costs, driven by longer routes, higher fuel consumption, and increased insurance premiums — a typical response when global trade patterns shift due to geopolitical pressures.
Qutub emphasized that Saudi Arabia’s transport and logistics sector is managing these developments through coordinated government oversight. The Ministry of Transport and Logistics, the Logistics National Committee, and the Logistics Partnership Council recently convened to evaluate the impact on trade and supply chains. Regular weekly meetings have been established to monitor developments and implement solutions to safeguard the stability of supplies and continuity of trade.
He noted that the Kingdom’s logistical readiness is the result of long-term strategic investments, encompassing ports, airports, road networks, rail systems, and logistics zones. Today, Saudi logistics integrates maritime, land, rail, and air transport, enabling a resilient response to global disruptions.
Qutub also highlighted the need for the private sector to continuously review logistics and crisis management strategies, develop alternative plans, and manage strategic stockpiles. Such measures are essential to mitigate temporary fluctuations in global trade and ensure smooth supply chain operations.
