High energy prices threaten Europe's climate goals and PV/EV manufacturing

Image of Britishvolt's Gigafactory project in Blyth. Source: Britishvolt.

The surge in power prices in Europe is jeopardising plans to boost the local solar and battery manufacturing capacities and could also hinder progress towards achieving the continent’s climate goals.

Rystad Energy made the warning earlier this week as its research shows that 35 GW of solar and over 2 TWh of battery cell manufacturing capacities are at risk of being mothballed because of the high electricity prices.

Europe is betting on renewables and electric vehicles (EVs) as it seeks to reduce its dependence on fossil fuels, especially those coming from Russia. The high energy prices could hamper such plans and also increase reliance on imported equipment.

“With manufacturers in other regions, such as Asia, enjoying lower electricity input tariffs, European producers are becoming increasingly uncompetitive by comparison,” Rystad said. This is hitting existing capacities and also making it hard to secure financing for future plants.

The energy research and business intelligence firm gave as an example Norway where a sixfold increase in electricity costs might force solar manufacturers to stop work for the remainder of the year.

In the UK, Britishvolt has delayed a giant battery factory to mid-2025 because of the rising energy costs and the need for additional fundraising.