Renewable energy costs will not become cheaper anytime soon, cautioned the head of a Riyadh-based think tank at the 15th Singapore International Energy Week (SIEW).
Fahad Alajlan, President of King Abdullah Petroleum Studies and Research Center (KAPSARC), was speaking during a panel discussion, titled “Mobilizing Greener Financing for Energy Infrastructure,” in Singapore on Tuesday.
Alajlan emphasized that the higher renewable energy costs must be addressed to adjust the public’s understanding.
The comments by Alajlan highlight the need for more clarity and better governmental policies to inform the public about energy misconceptions.
“The idea that renewable energy sources have the lowest costs has been widely disseminated, and the public may believe that energy costs will decrease in the next two to three years. That is not going to happen and if we don’t communicate this clearly, the public might have an adverse reaction when things don’t go as planned,” Alajlan said.
Even though the costs of clean energy technology have been decreasing due to economies of scale, a combination of rising demand, disrupted supply chains and limited supply of raw materials threaten cost cuts. The cost surges are also influenced by the concentration of several minerals and metals in only a few nations. The top three mineral producers currently account for more than 75% of the global supply of lithium, cobalt and some rare elements.
Copper, nickel, and aluminum prices increased by about 25% to 40% in 2021, while lithium and cobalt more than doubled in a trend that persisted in 2022.
Alajlan also cautioned about the shifts in energy perspectives, arguing the need for consistent policies. Shifting energy policies can be observed by looking at how in the past, many institutions discouraged additional investments in oil and gas, which has changed today. A future with sustainable energy necessitates better policy consistency, especially regarding long-term infrastructure planning. “We can’t just change our stance on policy every year and expect the private sector to invest in long-term energy projects for 2030,” he said.
Alajlan praised the recently adopted US Inflation Reduction Act (IRA), highlighting that Asian countries could potentially learn from it as a best practice. The IRA is not only the largest climate investment passed in US history, but it also pushes clear policies around technologies including renewables and long-term energy incentives that will drive the industry forward. It further allows billions of dollars for long-term energy projects, including initiatives for carbon capture and storage and the oil and gas industry.
Headed by Oliver Wyman, the panelists shared perspectives on the development of low-carbon solutions and innovations, as well as sustainable financing in the ASEAN region and globally.
The SIEW is one of the largest gatherings in Asia. Over 1,000 people, including energy ministers and industry leaders, attended the event. It is a platform for energy professionals, policymakers and commentators to discuss and share best practices and solutions within the global energy space.
The industry staple is hosted by the Energy Market Authority, a statutory board under the Ministry of Trade and Industry of the Government of Singapore. — SG
This article appeared on Saudi Gazette.