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Jump in shipping costs could hit Australia solar and wind projects

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Developers of large-scale wind and solar farms in Australia – and wholesalers in rooftop solar modules – are facing a big jump in costs after shipping companies jacked up the price of freight in response to the huge demand on imports caused by the current renewable energy investment boom.

Equipment suppliers and wholesalers say they face cost increases of 20-30 per cent after a shipping group called the Asia Australia Discussion Agreement (AADA) – bringing together some 12 major shipping companies – announced big increases in freight costs.

The costs have jumped by $US300 ($A391) for a 20′ container, and $US600 ($A782) for larger containers. They were imposed in September, and Australian developers are starting to feel the pinch, and warning that costs will increase for future projects.

The boom in investment is intensifying as developers of large-scale wind and solar farms attempt to secure deals to rush through their investment before the drawbridge is raised by financiers once it becomes clear that the renewable energy target of 33,000GWh by 2020 is met.

Some suggest that the target is 95 per cent complete, which means only a handful of the 30,000MW pipeline of wind and solar projects may get the go-ahead under the scheme – and there is currently no certainty about future policy and immense concern about the shape of the proposed National Energy Guarantee and its potential impact on new investment.

The large-scale solar industry is experiencing its biggest ever construction phase in 2017, with more than 2000MW of projects being built in Queensland alone. Large-scale solar farms are also under construction in most other states.

The Clean Energy Council estimates there is 4,300MW of wind and solar projects committed or under construction across Australia. Rooftop solar is also experiencing its biggest ever year, and there is expected to be 1GW of rooftop solar added this year, and it is not expected to slow down in 2018.

One major supplier said the impact of the increase in shipping costs had been felt just in the last few weeks. It was likely to land a significant hit on EPC contractors and suppliers in projects that had already locked down supply agreements and financing.

“We are seeing a rush of projects trying to get to financial close this year so they can get delivery in March or the second quarter,” said one supplier, who compared the rush to the close out of tax incentives that have marked the renewables industry in the US.

“I’m seeing it happen again. Developers are freaking out and this jump in shipping costs – and they are blaming the increase in freight for Australian solar and wind projects – is going to cause some major problems.”

One importer of solar modules agreed. “There is a big queue to get on boats at most ports in China,” he said.  

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  • Andrew Roydhouse

    $600 extra cost on a 40 foot long container containing around 600 (up to 750 quoted by some manufacturers) panels by my maths adds a cost of $1 or less per panel.

    That does not seem too dire an outcome for any project unless you are operating on margins below 1%.

    • Joe

      We could make the panels here in Australia…?

      • Coley

        That would seem the sensible solution.

      • Barri Mundee

        It is certainly desirable but probably uneconomic without protection from the lower cost structure of most of the incumbent manufacturers. One has to question the entire “free trade” mantra and I do. We need “fair trade” not a race to the bottom as is the norm at present.

  • George Darroch

    Shipping prices were unreasonably low for the last few years. While cartels to jack up prices aren’t good, sustainability in the shipping sector is needed.

    • George Darroch

      It will definitely add to the price of turbines.