Connecting news

Two news. The first is about surge in power sector construction cost. The other is about the lobbying efforts of an increasing number of people for the introduction of feed-in-tariffs in the UK.
This two news do not seem really connected. In my mind they are, a bit; simply considering that if the cost of conventional power sources is increasing then the relative cost of renewables might become not so high as before. So, we might need to update all those studies around (also used by governement to make decisions on energy policy) that compare  cost of different power technologies, taking into account not just the increase in fuel cost (i.e. the variable cost), but also increases in initial capital cost. I guess it would take some time, as in reality a robust estimation of generation costs is quite time consuming and subject to many uncertainty and discretion. But, who knows, in few years we might get interesting results.. and different energy policy approaches toward renewables.
well, not sure I succeeded in connnecting..but still, I think they are two interesting news/messages!

Comments

[Jack Kelly]

Thank you for the interesting post.

Unfortunately, I would imagine that many of the things exerting upwards price pressure on the construction of fossil fuel power plants are also exerting upwards price pressure on the construction and installation of renewable technologies. If copper gets more expensive then both wind turbines and coal plants will get more expensive. Indeed, I would take a wild guess that a GW of wind turbine capacity requires more copper in its construction than a GW of coal-fired power.

[chiara]

Thanks for your comment. I agree and I also though about it while writing the post. However, although higher prices for materials are one of the reasons for costs going up, it is not the only one. There could also be all sorts of bottlenecks along the value chain of the production of power plant components and the construction of the plant itself. For example I remember a presentation of a representative of the turbine industry few months ago, alerting the audience about the quite likely scenario of the worldwide turbine (not wind turbine!) industry reaching full capacity as a result of rising demand, with consequent pressure on prices. As you also read in the post I've referenced to, higher costs are not just caused by increase in row materials, but also by increasing lead times and requiring overseas sourcing resulting from pressure on the supply industry.
This could also happen in the renewable industry, and in fact happened for example in the PV industry, where silicon production for solar application was a serious bottleneck in the last years causing increase in prices. The problem is now almost solved as the industry relatively quickly adapted to such high demand with a strong flow of investments aimed at increasing silicon production capacity.
I do not know nuclear, coal or gas power component and station construction industry well enough to comment on the possible speed of "reaction" to such demand rise. It would be interesting to investigate more, and in any case, the message is: row materials are not the only factor and a more detailed analysis should be sector specific.

[Nathan Rive]

Chiara - I heard something recently that the 5 (or so) main power plant producers (Siemens, GE, etc) are basically booked out through the next decade to build gas plants. With the number of PV producers, I guess it's not the same issue with solar.

[chiara]

yes, this is was I meant. I am not sure what's the situation for the wind industry

[Nathan]

Sorry, I assumed as much. This "real world" info is very important in light of all the economic models (bottom-up and top-down) claiming we'll rush to gas electricity at great speed when we try to reduce our carbon.