Solar cell manufacturers are receiving more than twice as many orders this year than before the pandemic. High energy prices and the Ukraine war are accelerating the shift away from fossil fuels.
The sun shone mutedly in Shanghai as Xiande Li commented on his latest quarterly figures. The Chinese is CEO of Jinko Solar, the world’s third largest manufacturer of solar cells – and he has good news. In the first quarter, sales increased by 92 percent compared to the previous year. More and more orders have been coming in, especially since the end of February. “The Ukraine war has shown how important solar energy is,” says Xiande in a press release, “we expect increasing demand for the rest of the year and further increases in the future.”
The Chinese can also quantify these increases. 250 gigawatts of solar capacity is to be installed worldwide this year. That would be 66 gigawatts more than in the previous year and almost twice as much as in the last year before the pandemic, 2019. A total of 1172 gigawatts of solar power output would then be possible worldwide at the end of the year – and the trend is rising.
The Ukraine war acts as a major catalyst for the industry. First, it drives up fossil fuel prices. Oil is now 14 percent more expensive than before the invasion and 61 percent more than a year ago. The price of natural gas has increased by 59 and 139 percent, respectively. Against this background alone, states are accelerating the transition to renewable energies. However, the production of solar cells and wind turbines has also become more expensive. Many of the raw materials for this come from Russia.
Secondly, the Ukraine war means that European countries in particular want to make themselves independent of Russian oil and gas. The delivery stops to Poland and Bulgaria have shown what power Russia has with its raw material reserves. The EU Commission is planning to completely dispense with Russian coal from the summer and to drastically reduce gas supplies. A third of the savings are to be replaced by renewable energies. “Russia doesn’t make solar cells and wind turbines,” Borislav Sandov, Bulgaria’s deputy environment minister, told The Wall Street Journal, “but they do produce fossil fuels. So we have to get out of them.”
It won’t be cheap: Allianz has calculated that an energy transition away from Russian gas would take six years and would require investments of an additional 170 billion euros per year for the entire EU, i.e. a little over one trillion euros in total. But: That is still the cheapest way for the Union to achieve energy self-sufficiency. The investments correspond to about 1.3 percent of the EU gross domestic product. Converted to Germany, that would be around 46.4 billion euros per year.
Corresponding projects are already being planned. At the end of March, energy supplier E.On entered into a partnership with Australian billionaire Andrew Forrester and his mining company Fortescue Metals. The plan: Green hydrogen is to be produced from solar and wind power in Australia and shipped to Europe. The hydrogen could, for example, be used in steelworks as a substitute for natural gas. Although there is a long journey from the other end of the world, the climate balance would still be significantly better than with Russian gas. Australian hydrogen is scheduled to flow through E.On’s pipelines from 2024, and by 2030 the volume is expected to increase to five million tons per year.
But: Even if the transition to renewable energy is happening faster than ever before, it will still take time. In the short term, it is not possible to build enough solar and wind power plants to do without oil and gas. As a result, many countries around the world are burning even more coal to generate electricity. In Asia in particular, from India to China to Japan, this will happen this year. There is too much concern about power outages.
However, this is only likely to be a short-term effect: “Precisely because fossil fuels are now becoming so expensive, this is a strong argument for renewable energies being more competitive,” says Yan Qin. She is an analyst for the energy sector at Norwegian company Refinitiv.
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