Solar panels on the roof of two houses, in Rheinberg (Germany) .SASCHA STEINBACH (EFE)
Copper has risen 40% in the last year, steel 30% – although it rose almost 60% last spring – cobalt has almost doubled in value and nickel costs 20% more. This brutal rise in metals has repercussions far beyond the industrial and geopolitical: their participation is fundamental in the manufacture of batteries, wind turbines and solar panels, key elements for the decarbonization of the economy. And their increasing cost poses a threat to the development of these technologies when the world needs them most.
The manufacture of an electric car requires six times more mineral resources than a combustion one and a typical wind turbine requires nine times more than a gas-fired electricity generation plant, according to a recent comparison by the International Energy Agency (IEA, dependent OECD). The conclusions of the study were staggering: since 2010, when the transition to green energy underwent a major acceleration, the amount of minerals required to generate one megawatt of electricity has increased by 50%.
Such are the needs that, according to A study Published last week by economists Lukas Boer, Andrea Pescatori, Martin Stuermer and Nico Valckx, the combined value of copper, nickel, cobalt and lithium will equal that of oil in the coming years in a scenario of drastic reduction in emissions. , the one that the planet requires to avoid the worst of the scenarios that climate change draws.
“The rise in the price of these minerals could be a barrier to the energy transition,” says Gavin Montgomery, an analyst at Wood Mackenzie, a consultancy that has been raising the alarm for a long time about the effect that rising metal prices can have on investment in solar energy. It can also act as a brake on the development of lithium batteries: “All the materials that are needed in their manufacture have risen in 2021, and that can slow down the process of substituting combustion vehicles for electric ones”, Montgomery emphasizes. According to their data, the demand for nickel for batteries will multiply by almost nine by 2030, that of lithium will increase six times and that of cobalt will triple. Three materials that account for about 40% of the cost of a battery to use.
The latest projections from Bloomberg Intelligence support their claim: after several years of uninterrupted declines, the price of lithium batteries – the majority on the market – will rise next year in the heat of rising raw materials prices. The rise also comes at a critical moment: for the price of electric cars to begin to approach that of their combustion pairs, that of batteries – by far the component that makes them more expensive – should fall below $ 100 ( about 87 euros) per kilowatt hour. However, after falling below $ 140 this year, the expectation of a rise in 2022 pushes that horizon away.
“The rising cost of steel, nickel or cobalt will make it more expensive to manufacture electric vehicles,” he says. Michael Tamvakis, Professor of Economics at London’s Bayes Business School. “That could slow down the transition in rich countries. In addition, these same metals are necessary for the manufacture of material for renewables, which increases the cost of new investments in the sector ”, confirms this specialist in raw materials. However, the Greek academic does not believe that these fluctuations are enough to derail the shift towards renewables.
Either Karen Smith Stegen, a professor at the Jacobs University in Bremen, believes that this threat will crystallize. “It is true that in the short term the rise in the price of metals can be a problem, but its increase in price will also stimulate exploration and mining even more, with which a greater quantity will be available in global markets”, he points out.
In addition, says the American academic, subsea extractions will soon be able to complement land-based production. “And if its increase in price really ends up being an obstacle for renewables, the States could change the subsidies that they have given for decades to fossil fuels for subsidies to metals that are critical for their development.” Smith Stegen is much more concerned about the supply chains of this type of metals: China, where most of the solar panels installed in the world come from, also has an almost total monopoly on rare earth processing – not mining -: “Both technologies and supply chains take decades to develop, and China is far ahead of the rest of the world.”
Manufacturers are already suffering the rise
Some of the companies called to lead the transition towards green energies, such as the manufacturers of wind turbines, batteries or solar panels, are already beginning to feel the rising cost of raw materials in their income statements. Last week, Danish windmill giant Vestas was forced to cut its profit forecast for the second time so far this year due to the rising cost of steel – an essential raw material for its activity – and, to a lesser extent, copper. Also the Spanish-German Siemens Gamesa is suffering from the rise in metals, which is already beginning to pass on to the final price of wind turbines.
In the field of photovoltaics, the voice of alama has come from the other side of the Atlantic. “Unfortunately, at the same time that we are seeing record demand for solar energy, we are having to deal with increases in the price of steel that are unprecedented in both their magnitude and their rate of increase,” said James Fusaro, CEO of Array in May. , one of the leading companies in monitoring systems for solar panels, slipped in the last presentation of results. And in batteries, the alert has come from China, where Gotion High-Tech sent a letter to its customers in October explaining that the rising cost of materials forced them to raise prices. The pressure is felt on all fronts.