By Divya Chowdhury

MUMBAI, (Reuters) – Rising commodity prices will raise the cost of green energy projects. However, investors and policy advisors said that this could be offset by greater access to capital and economies of scale.

They told the Reuters Global Markets Forum that rising prices and supply chain issues for certain commodities and goods required for green projects won’t pose a threat to long-term economic viability for clean energy.

Allow fees and labour costs, as well as customer acquisition costs, are some of the overhead costs that fall due to economies of scale.

The industry’s overall costs will fall as there is no barrier to scale up, according to Harry Boyd Carpenter (EBRD), managing director for green economics and climate change, European Bank for Reconstruction and Development).

Vaibhav Chaturvedi, an associate at the Council on Energy, Environment and Water, saw “greenflation”, which is the increase in costs of going green, as a major concern, especially in short-term.

“Underlying commodities prices are rising all over the world,” he stated.

Metals, such as nickel and cobalt that are vital to energy transition technology, have seen prices rise between 20-21%. Price performance on the LME in 2021 of metals used in the energy transition, https://fingfx.thomsonreuters.com/gfx/ce/lgvdwnerlpo/ET%20metal%20on%20LME.png

Chaturvedi however saw the lower cost of financing as an “important leverage” that could be used to offset the rise in underlying expenses.

Allied Market Research estimates that by 2030 the world’s renewable energy market will be nearly double its current value of $881 billion.

Gauri Sinha, the deputy director general at the International Renewable Energy Agency, (IRENA), argued last year that despite rising prices and disruptions in supply chains, declining financing costs allowed for record-breaking generation of 260 megawatts from renewable sources.

You won’t get much money for climate risks. Singh stated that the market for renewables is softening, while it’s not so with climate risks.