(Bloomberg) -- French utility Engie SA said it can ride out price increases for solar panels and wind turbines because big customers are willing to pay more for long-term supplies of clean power.
The Ukraine war and continuing China lockdowns are amplifying concerns about energy security and the transition away from fossil fuels. Supply-chain disruptions and higher costs for raw materials already were prompting turbine manufacturers such as Siemens Gamesa Renewable Energy SA and solar panel makers to raise prices.
“Today, the top issue of our clients, our industrial clients in particular, is to secure energy at a foreseeable cost, and an energy that's also as low-carbon as possible,” Chief Executive Officer Catherine MacGregor said Thursday. “We see this tension -- almost competition -- between manufacturers to access such contracts.”
Prices for corporate power purchase agreement increased across Europe in the past year, a BloombergNEF report showed last month.
To meet rising demand, the French utility wants to operate 50 gigawatts of renewable power by 2025 and 80 gigawatts by 2030, compared with 34 gigawatts at the end of last year.
By the end of the decade, more than 11 gigawatts will be supplied by offshore wind farms, thanks partly to giant projects won by its joint venture with EDP Renovaveis SA in the U.K., the U.S. and South Korea.
Engie is “very confident” it can achieve those targets without more acquisitions, but the company will keep looking for opportunities, said Sergio Val, the managing director for Engie's renewable business in Europe. The company announced the purchase of Spanish clean-power developer Eolia in November.
“We've been seeing in recent times a very strong rise in raw materials, steel and solar panels,” Val said. “That comes with very nice progress in the price of power we sell, largely within long-term power purchase agreements.”
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