Rising copper prices challenge India’s renewable energy sector
Amid escalating copper prices, India’s renewable energy sector faces rising costs and budgeting challenges. In recent months, copper prices have surged due to increased manufacturing activity in China and the US, coupled with new US sanctions on Russian copper imports.
Kannan Krishnan, joint managing director of Jackson Green, told ET Energy World, “Over the last year, copper prices have increased by 20%, driven primarily by increased manufacturing activity in China and the US, along with fresh US sanctions on copper sourcing from Russia. These high copper prices adversely affect project costs.”
Copper is an essential material in a wide range of power sector equipment, including transformers, insulators, cables, current transformers, and potential transformers.
Solar projects require about 5 tons of copper per MW, while onshore and offshore wind farms require 4.3 tons and 9.6 tons of copper content per MW, respectively. According to AMPIN, an Indian independent power producer, copper prices have increased by 23% since April 2024, increasing the overall balance of system (BOS) cost of renewable energy projects by almost 3.5%.
The price rise is driven by a weak US dollar, discouraging producers from increasing output and copper supply. Additionally, copper ore production is heavily concentrated in South America, particularly in Chile, which accounts for approximately one-third of the global mined copper supply.
Read more: BHP’s Potential Takeover Bid of Anglo-American spotlights global demand for copper
Other reasons include the inadequate supply of copper ores, the quality of ores, and the cost of extracting them. Additionally, unforeseen events like worker strikes, earthquakes, bad weather, and geopolitical instability can also force copper prices upwards.
A procurement and construction firm told ET Energy World that uncertainty about the demand-supply chain can disrupt project timelines and potentially cause delays.
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