The Impact of Commodity Prices on Renewable Energy

In many markets across the U.S., renewable energy sources (like wind and solar) continue to be a cost-competitive choice for consumers — if not the cheapest option — even as the costs associated with producing them have risen.

Of note, community solar — which doesn’t require consumers to make changes to their property — has become increasingly attractive in light of rising commodity prices. It’s similar to rooftop solar in that the amount of solar energy used offsets the amount paid to the utility.

Rising commodity prices have increased the cost of producing solar photovoltaic technology (PV) modules, wind turbines, and biofuels worldwide. This situation has short-term implications for equipment manufacturers, project developers, and policy makers. But the high coal and fossil gas prices that we’ve experienced in the last 2 years could make solar and wind even more attractive to consumers — regardless of their sustainability goals.¹ Also, of note: the growing interest in green hydrogen, which has the potential to positively impact energy-intensive industries like steel manufacturing and ammonia generation. Produced by the electrolysis of water, and with significantly lower carbon emissions than grey hydrogen — produced by steam reforming of natural gas — green hydrogen may be used to decarbonize sectors that will be difficult to electrify. The Inflation Reduction Act’s tax credit for clean hydrogen could make it price-competitive as well, though infrastructure needs mean it’s not quite a viable option in the U.S.

While fossil fuels — specifically, natural gas — are still essential for meeting domestic and global energy demand, cleaner energy sources are becoming a large and economically viable part of the generation and consumption mix

WIND AND SOLAR ACCOUNTED FOR OF CAPACITY ADDED IN 2022

70%