Research from Rystad Energy reveals that 35GW of solar manufacturing and more than 2000 gigawatt hours of battery cell manufacturing capacity in the EU could be mothballed unless power prices return to normal.
The energy intensive nature of these manufacturing processes is leading some operators to temporarily close or abandon production facilities as the cost of doing business escalates.
Rystad stated that unless prices turn around soon, Europe’s plans to cut dependence on imported fossil fuels by boosting installed renewable generation capacity and electric vehicle (EV) usage could be derailed.
Although Europe’s solar manufacturing capacity is relatively modest on a global scale – making up only 2% of total capacity – any shutdowns or abandonment of projects would have significant long-term negative consequences.
The EU has targeted 20GW of production capacity by 2025, and although 35GW of projects is currently planned, many have not secured funding, increasing the risk that these projects will fall through if high power prices continue.
Battery cell manufacturing – crucial in the EV and battery storage supply chain – is even more energy intensive than solar manufacturing, and Europe is a major global player.
The EU currently boasts about 550GWh of capacity, representing 27% of global operational capacity.
Announced projects under development are set to boost that total significantly, increasing capacity to 2.7 terawatt-hours, positioning the EU as a global leader.
However, those are now at risk and the car manufacturing and battery storage sectors could struggle to source Europe-made batteries as a result, stated Rystad.
“High power prices not only pose a significant threat to European decarbonisation efforts but could also result in increased reliance on overseas manufacturing, something governments are eager to avoid.
“Building a reliable domestic low-carbon supply chain is essential if the continent is going to stick to its goals, including the REPowerEU plan, but as things stand, that is in serious jeopardy.”
Audun Martinsen, Rystad Energy’s head of energy service research, said: “European electricity prices have risen to unprecedented levels in recent weeks due to unplanned nuclear and hydropower plant outages, soaring demand for cooling during an oppressive summer heatwave and reduced gas deliveries from Russia.
“Although prices have retreated significantly since these record highs in August, rates remain in the €300 to €400 range, many multiples above pre-energy crisis norms.”
Britishvolt’s signature giga-sized battery factory in Blyth in the UK – which would add 30 GWh to the continent’s manufacturing capabilities – has already been delayed to mid-2025 due to rising energy costs and the need for additional fundraising, Rystad stated.