Global supply chain squeeze, soaring costs threaten solar energy boom

Global supply chain squeeze, soaring costs threaten solar energy boom
The sun rises before the inauguration of the Cerro Dominador Solar Power Plant, in Maria Elena, Chile. (Reuters)
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Updated 09 June 2021

Global supply chain squeeze, soaring costs threaten solar energy boom

Global supply chain squeeze, soaring costs threaten solar energy boom
  • Soaring shipping freight rates along with higher costs for fuel, copper and labor are also pinching project costs, company executives said

LOS ANGELES: Global solar power developers are slowing down project installations because of a surge in costs for components, labor, and freight as the world economy bounces back from the coronavirus pandemic, according to industry executives and analysts interviewed by Reuters.
The situation suggests slower growth for the zero-emissions solar energy industry at a time world governments are trying to ramp up their efforts to fight climate change, and marks a reversal for the sector after a decade of falling costs.
It also reflects yet another industry shaken up by the supply chain bottlenecks that have developed in the recovery from the coronavirus health crisis, which has businesses from electronics manufacturers to home improvement retailers experiencing huge delays in shipping along with soaring costs.
“The narrative is shifting,” S&P Global Platts clean energy analyst Bruno Brunetti said in an interview, citing the costs inflation.
Among the biggest headwinds for solar is a tripling in prices for steel, a key component in racks that hold solar panels, and polysilicon, the raw material used in panels.
Soaring shipping freight rates along with higher costs for fuel, copper and labor are also pinching project costs, company executives said.
Research firm IHS Markit warned last week that its global solar installation forecast for the year could slide to 156 gigawatts from a current projection of 181 GW if price pressures do not ease.
Wall Street has also punished the sector in recent weeks, sending the MAC Global Solar index down 24 percent this year after it tripled in 2020.
Project developers in the United States, the No. 2 solar market behind China, told Reuters they are struggling to price projects for 2022 given the lack of clarity on how long price spikes will last.
Solar engineering, procurement and construction firm Swinerton Renewable Energy said some of its customers have also put “soft holds” on projects slated to start later this year while they wait to see if prices trend down.
“We’ve just become accustomed to such a low cost energy source,” said George Hershman, Swinerton’s president. “Like anything it’s hard to accept that you’re going to start to pay more.”
Contract prices for solar were already up 15 percent in the United States in the first quarter compared with last year due to higher interconnection and permitting costs, according to a quarterly index by LevelTen Energy.
US panel manufacturer First Solar Inc. told investors in April that congestion at American ports was holding up its module shipments from Asia.
And a US maker of solar mounting systems, Array Technologies Inc, withdrew its forecast for the year last month due to steel and freight costs.
In Europe, some projects that do not have strict timelines for when they need to begin delivering power are being delayed, according to executives and analysts.
“The situation has not resolved itself because prices have stayed high, so those who have capacity to wait are still waiting,” said Jose Nunez, chief financial officer of Spanish solar tracker maker Soltec Power Holdings SA. Nunez said Soltec was seeing project delays in all of the markets it serves.
Supply constraints could put upward pressure on relatively stable European solar prices later this year as companies seek to preserve profit margins that are already razor thin, according to LevelTen.
In China, the world’s top solar product maker, producers are already raising prices to protect margins, leading to slower orders.
According to three solar panel makers in China polled by Reuters, prices for panels are up 20-40 percent in the past year, following the surge in costs for polysilicon, the raw material for solar cells and panels.
“We have to manufacture the product, but on the other hand, if the price is too high, the project developers want to wait,” Jack Xiao, marketing director at BeyondSun Holdings, a panel maker that exports 60 percent of its products, said.
A state-backed solar cell factory manager who asked not to be named told Reuters that output has dropped because customers are reluctant to fulfill orders at current prices.
China’s Canadian Solar Inc, a top panel producer, said last month that its product prices were up 10 percent in the first quarter from the previous three month period, an increase it plans to pass on to customers.
“We will continue to take price up, and we’re willing to give up some volume in order to protect margins,” Yan Zhuang, president of the company’s module making division, said on a conference call with investors last month.


Egypt signs 1.7 billion euros of financing deals with France

Egypt signs 1.7 billion euros of financing deals with France
Updated 1 min 44 sec ago

Egypt signs 1.7 billion euros of financing deals with France

Egypt signs 1.7 billion euros of financing deals with France
  • Of the financing, 776 million euros came from the French government and 990 million euros from AFD
  • The signings came during a visit by French finance minister Bruno Le Maire to Cairo

CAIRO: Egypt has signed 1.7 billion euros ($2.06 billion) worth of deals with France to finance projects in the transportation, infrastructure, electricity and wholesale sectors, the cabinet said on Sunday.
Of that financing, 776 million euros will come from the French government and 990 million euros from AFD, France's development agency, the cabinet said.
The signings came during a visit by French finance minister Bruno Le Maire to Cairo.
In May, France announced a 4 billion euro deal to deliver 30 Dassault warplanes to Egypt beginning in 2024, strengthening ties with what it considers a vital partner in fighting Islamist militants.
Projects announced on Sunday by the cabinet include sanitation stations as well as a number of railway projects, including the provision of 55 new cars for the Cairo metro's oldest line and the construction of a railway line between Aswan in southern Egypt and Wadi Halfa in neighbouring Sudan.
AFD will provide 150 million euros in support of Egypt's universal health insurance programme, the cabinet said. ($1 = 0.8260 euros)


UAE builder Drake & Scull returns to profit in Q1

UAE builder Drake & Scull returns to profit in Q1
Updated 13 June 2021

UAE builder Drake & Scull returns to profit in Q1

UAE builder Drake & Scull returns to profit in Q1
  • This represents a return to profit from a net loss of 30 million dirhams for the same period in 2020, driven by ongoing operations across the region

DUBAI: Dubai contractor Drake & Scull International (DSI) recorded a net profit of 115 million dirhams ($31.3 million) in the first three months of the year.
This represents a return to profit from a net loss of 30 million dirhams for the same period in 2020, driven by ongoing operations across the region, including in countries such as Tunisia, Palestine, Kuwait, and Iraq.
DSI also recorded revenues of 46 million dirhams and the order backlog remained stable at 376 million dirhams, it said in a statement.
Drake & Scull was hit hard by the regional construction downturn since 2014 and has been involved in lengthy financial restructuring and cost cutting.
It signed contracts worth 376 million dirhams earlier this year.


PIF boosts senior management team in expansion drive

PIF boosts senior management team in expansion drive
Updated 13 June 2021

PIF boosts senior management team in expansion drive

PIF boosts senior management team in expansion drive
  • The latest appointments follow the creation of two new deputy governor roles, announced last Tuesday

RIYADH: The Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, on Sunday announced several new senior appointments, just days after it also created two new deputy governor roles as part of its expansion drive.

The fund announced the appointment of Eyas Al-Dossari and Omar Al-Madhi as senior directors to its MENA investments division, and Abdullah Shaker as senior director to the global capital finance division.

Al-Dossari joins PIF from his position as managing director and head of investment banking for Goldman Sachs Saudi Arabia, where he served since 2017. He also previously worked at HSBC Saudi Arabia and the initial public offering and merger and acquisitions department at the Saudi Capital Market Authority.

Al-Madhi previously held senior positions at Abdul Latif Jameel Investments, Volkswagen Group, McKinsey & Company and Saudi Aramco. He is chairman of the board and executive committee of the Saudi Fisheries Company and is also a member of the board of the National Agricultural Development Company, which are both part of PIF’s portfolio.

Shaker joins PIF from Saudi Al Baraka Banking Group and has almost 25 years’ experience in banking and financial services, having worked for Deloitte, HSBC Saudi Arabia and the Saudi Arabia Capital Market Authority.

The latest appointments follow the creation of two new deputy governor roles, announced last Tuesday.

Turqi Al-Nowaiser, who heads the international investments division, and Yazeed Al-Humied, who leads the MENA investments division, will take on the deputy governor roles alongside their current responsibilities at PIF.

“The latest appointments bolster the PIF leadership team, as it implements its ambitious plans as one of the world’s largest and most impactful investors, with the stated aim of reaching AUM (assets under management) of more than $1.07 trillion, while investing $40 billion annually into the local economy through 2025,” the PIF said in a statement on Sunday.

The fund announced in December 2020 that its total employee count surpassed 1,000, up from about 700 at the start of 2020 and 40 five years ago. It said that about 84 percent of its employees were Saudi citizens and 26 percent were women.

The PIF has grown to $430 billion AUM since 2016 and has invested about $90 billion into the Kingdom’s economy over the last five years, creating more than 331,000 new direct and indirect jobs.


Dubai utility provider to boost clean energy capacity this year

Dubai utility provider to boost clean energy capacity this year
Updated 13 June 2021

Dubai utility provider to boost clean energy capacity this year

Dubai utility provider to boost clean energy capacity this year
  • The government agency will use photovoltaic solar panels and Concentrated Solar Power (CSP) to achieve a total capacity of 1,614 MWThe government agency will use photovoltaic solar panels and Concentrated Solar Power (CSP) to achieve a total capacity of 1

DUBAI: The Dubai Electricity and Water Authority (DEWA) said it was adding 600 megawatts (MW) of clean energy capacity to the emirate’s power mix this year.

The government agency will use photovoltaic solar panels and Concentrated Solar Power (CSP) to achieve a total capacity of 1,614 MW, it said in a statement.

Half of the additional capacity will be from the 5th phase of the Mohammed bin Rashid Al-Maktoum solar park. The rest will come from a 262-meter CSP tower and a parabolic trough.

Upon delivery of the projects, clean capacity in Dubai’s energy mix will reach around 10 percent in July, and 12 percent by the end of the year.

“This supports the Dubai Clean Energy Strategy 2050, which aims to provide 75 percent of Dubai’s total power capacity from clean energy sources by 2050,” DEWA’s CEO Saeed Mohammed Al-Tayer said.


G7 split on reallocating $100b IMF funds to COVID-hit nations

G7 split on reallocating $100b IMF funds to COVID-hit nations
Updated 13 June 2021

G7 split on reallocating $100b IMF funds to COVID-hit nations

G7 split on reallocating $100b IMF funds to COVID-hit nations
  • Germany and Italy had yet to back the inclusion of the $100 billion figure in the final statement by leaders

CARBIS BAY, England: Group of Seven leaders were trying to resolve differences over a proposal to reallocate $100 billion from the International Monetary Fund’s warchest to help countries struggling to cope with the COVID-19 crisis.
An almost final version of the G7 communique seen by Reuters showed Germany and Italy had yet to back the inclusion of the $100 billion figure in the final statement by leaders.
The IMF’s members agreed in April to a $650 billion increase in IMF’s Special Drawing Rights and the G7 countries are considering whether to reallocate $100 billion of their rights to help poor countries fight the COVID pandemic.
SDRs are the IMF’s reserve asset, and are exchangeable for dollars, euros, sterling, yen and Chinese yuan or renminbi. Member states can loan or donate their SDR reserves to other countries for their use.
The head of the IMF, Kristalina Georgieva, told reporters on the sidelines of the summit that she had been heartened by the G7’s support for the plan and that she expected a clear indication later on how best to proceed, adding that the $100 billion target had been in discussion.