Europe Plots Solar Revival to Replace Russian Gas

Twice bitten, three times shy – except when it comes to today’s politically strategic solar industry.

Despite the historical failures of Western solar panel manufacturers to compete with Chinese suppliers, Brussels, as well as Washington, hopes to rebuild its production facilities locally. means to supply and profit from the proposed construction of solar energy. It could work at this point, or alternatively it could be an expensive madness that leaves the West heavily dependent on Asian suppliers.

European Union officials said on Wednesday that solar energy is “a mainstay” of their efforts to become independent of Russian energy imports by 2027. The solar initiative Solar energy is one of the measures, but is estimated to displace around 9 billion cubic meters of gas imports annually by 2027, roughly one-tenth of the EU’s planned reduction.

The new solar strategy aims to double capacity by 2020 — adding 320 gigawatts by 2025 and 600 gigawatts by 2030 — through streamlining licensing, training workers, increasing energy requirements rooftop and phased solar panels for all major commercial and public buildings, as well as new residences. It also aims to build a local supply chain for the solar industry, now with roots in Asia, with an annual capacity of 20 gigawatts by 2025.

According to the EU, rooftop solar is more expensive than utility-scale, but it is built quickly and can provide almost a quarter of the electricity consumed by the EU, more than current gas. . Rooftop installation does not require additional land, is less objectionable as locals often benefit from the power produced and it also minimizes transmission requirements, thus avoiding challenges for allowable and power losses along the line.

High electricity prices in Europe have improved payback. Daniel Tipping at consulting firm Wood Mackenzie says EU consumer interest grows exponentially as payback periods are in the range of seven to eight years. Pairing solar with storage is becoming increasingly popular, especially with high electricity prices and incentives in Germany, Italy, Austria and the UK.

The shift from electrification to solar power threatens to create a new dependence on Asian panel manufacturers and especially China. European companies currently contribute only about 9% of the total value added in the solar supply chain, according to Guidehouse Insights. However, unlike Russian gas, which requires ongoing purchases, the panels have a lifespan of 20 to 30 years, giving Brussels time to boost the local supply chain.

They will need it. Unlike the US, Europe has a very fragmented rooftop installation market. It features competing companies building racks to transfer panels to track the sun and power inverters, which convert electricity into alternating current and optimize output. However, it has not been able to compete with the large low-cost Chinese plate manufacturers.

Europe hopes to rebuild its local supply chain with a strategic alliance similar to the one established in 2017 for electric vehicle batteries. So far, it’s been a successful initiative, lifting EU production capacity from 0% in 2017 to 25% forecasting global supply by 2030, according to Anna Darmani from Wood Mackenzie. It has fostered cooperation and spurred the development of new production sites in Europe, although the nascent industry still needs to demonstrate that it can compete on quality and price with manufacturers. Asia’s leading supplier.

Unlike batteries, Europe has some solar legacy to build on. A listed company that has weathered the ups and downs is Meyer Burger,

which until recently focused on solar research and production equipment sales. It turns around in 2020 and is opening facilities in Germany and Arizona to produce 4.6 gigawatts of high-efficiency solar cells and modules annually by 2025, although the pandemic has caused some delay. Enel,

The Italian utility, aspiring to be a global green energy giant, is also investing in a plant in Sicily to build three gigawatts of high-tech modules, with the help of EU funds . European-made panels will have domestic appeal but may still face stiff competition as Chinese and Indian manufacturers are investing in similar technology.

Solar production in Europe offers very few companies that equity investors can buy into, but those are early days. The push for high-tech solar panels will create jobs and improved energy security politicians want, but the market needs to evolve further before it’s clear if it can. hot returns for investors or not.

As Europe races to phase out Russian energy, US natural gas producers are struggling to meet rising demand and prices. Factors including inclement weather and a need for equipment have created a knot in the middle of the war in Ukraine. Illustration: Laura Kammermann and Sharon Shi

Write letter for Rochelle Toplensky at rochelle.toplensky@wsj.com

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https://www.wsj.com/articles/europe-plots-solar-revival-to-replace-russian-gas-11652956668?mod=rss_markets_main Europe Plots Solar Revival to Replace Russian Gas

Edmund DeMarche

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