BAKU, Azerbaijan, October 7. Europe’s plans to reduce dependence on imported fossil fuels by increasing installed renewable energy capacity and using electric vehicles could be thwarted, if prices do not come down, Trend reports via Rystad Energy, independent energy research and business intelligence company from Norway.
According to the company, 25 percent of the European solar and battery manufacturing capacity remains at risk today.
“Some 35 GW of solar PV manufacturing and more than 2,000 GWh of battery cell manufacturing capacity could be mothballed unless power prices quickly return to normal levels,” the research showed.
As the report noted, power prices in Europe have risen to unprecedented levels in recent weeks due to unplanned shutdowns of nuclear and hydro power plants, a surge in demand for cooling during the heat of the summer, and reduced gas supplies from Russia.
Thus, daily average spot electricity prices in Germany exceeded 600 euros per MWh, while in France those surpassed 700 euros per MWh.
“During peak hours, European power prices have spiked to 1,500 euros per MWh, unsustainable levels for consumers, including the industrial sector. Although prices have retreated significantly since these record highs in August, rates remain in the 300 to 400 euros range, many multiples above pre-energy crisis norms,” the research noted.
As gas shortages are expected to persist in Europe for several years, and as a result high electricity prices will persist, financing and investment for solar power plants may be challenging. And even though the EU has set a production capacity target of 20 GW by 2025, and although 35 GW of projects are currently planned, many have not received funding, increasing the risk of disrupting these projects if high electricity prices persist.
Also, the deployment of electric vehicles in Europe may slow down significantly due to increased electricity prices, as well as the production of batteries themselves.
“With Chinese manufacturers enjoying much lower power prices, European manufacturers’ plans to rapidly scale production could be challenged,” Rystad Energy said.
“The EU currently boasts about 550 GWh of capacity, representing 27 percent of global operational capacity. Announced projects under development are set to boost that total significantly, increasing capacity to 2.7 terawatt-hours, positioning the EU as a global leader. However, those are now at risk and the car manufacturing and battery storage sectors could struggle to source European-made batteries as a result,” the research noted.
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