Bloomberg: Renewable power’s big mistake was a promise to always get cheaper
Bloomberg recently reported that the biggest mistake made by the renewable energy industry was the promise that wind and solar would always get cheaper. This claim has turned out to be untrue, and the expectation that wind and solar would always get cheaper is now harming the wind and solar industries:
Renewable-energy producers have long touted the promise of cheap electricity, an assurance that’s helped them eat into the dominance of fossil fuels. But the pledge has gone too far, according to the world’s biggest wind-turbine maker.
Manufacturers such as Vestas Wind Systems A/S are seeing losses pile up as orders collapse at a time when they should be capitalizing on the turmoil in natural-gas markets. To blame — at least in part — is the industry’s insistence that clean electricity can only get cheaper, according to Henrik Andersen, chief executive officer of the Danish wind giant.
“It made some people make the wrong assumption that energy and electricity should become free,” Andersen said in an interview in London. “We created the perception to some extent. So we are to blame for it. That was a mistake.”
While wind-power costs have steadily declined, to the point where many people concluded prices would eventually hit zero, technological advances can only go so far. Now the industry needs to charge more so that it can deliver the massive scale-up needed for countries to achieve ambitious climate goals.
The Bloomberg piece notes that orders for wind turbines are falling in 2022 due to a variety of price increases and supply-chain issues.
While many people in the general public may be surprised that wind and solar costs are increasing, the writing has been on the wall for some time. Power Purchase Agreement (PPA) costs have been rising since 2019.
It is also important to remember that PPA prices are after companies factor in federal subsidies for wind and solar, meaning the true cost of wind and solar are even higher.
Americans have been sold the idea that wind and solar will deliver reliable, low-cost power because wind turbines and solar panels will always become cheaper. The data shows that this sales pitch is not supported by real-world data.