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The transition to renewable energy sources will lead to an increase in the demand for base metals in the coming years, predicts Wood Mackenzie.
In a report released Monday, analysts for the energy consultancy said that increasing reliance on solar energy would increase demand for several non-ferrous metals if governments meet their commitments to limit global warming.
Wood Mackenzie named three metals in particular as raw materials: aluminum, copper and zinc.
The report’s authors outlined three possible scenarios for the metals, with demand growth depending on the success of international efforts to limit global warming.
Under the Paris Agreement – a landmark agreement adopted in 2015 and signed by 196 countries – States have agreed on a framework to prevent global temperatures from rising by more than 2 degrees Celsius compared to pre-industrial levels, although the treaty aims to prevent global temperatures from rising by more than 1.5 degrees Celsius.
Wood Mackenzie’s base scenario assumes that temperatures will have risen by 2.8 to 3 degrees Celsius by the end of the century compared to pre-industrial times.
In this situation, the aluminum demand from the solar power sector would increase from 2.4 million tons in 2020 to 4.6 million tons in 2040.
Typically, aluminum is used in solar panel frames and their structural parts, noted Kamil Wlazly, a senior research analyst at Wood Mackenzie.
However, if the global temperature rise were kept between 1.5 and 2 degrees Celsius, it would mean that aluminum demand for solar power would have reached between 8.5 million tons and 10 million tons per year by 2040, according to the analysts.
In the most optimistic climate scenario, where renewable energy sources are more likely to be used to limit warming to 1.5 degrees Celsius, demand from the solar sector would account for 12.6% of total global aluminum consumption by 2040 – up from 3% in 2020.
Demand for copper – which is used in high and low voltage transmission cables and solar thermal panels – will also see “remarkable gains” as solar power becomes mainstream, Wood Mackenzie said.
The baseline scenario of the report predicted that the demand for copper from solar power generation would increase from 0.4 million tons in 2020 to 0.7 million tons per year by 2040.
Copper consumption in the solar sector would rise to 1.3 million tons by 2040 if global warming were limited to 2 degrees Celsius.
If the temperature rise could be limited to 1.5 degrees Celsius, consumption of the red metal would likely rise to 1.6 million tons per year over the next two decades, the report said.
Meanwhile, analysts found that only zinc coatings could provide cheap, long-lasting corrosion protection, using the metal in the structural parts of solar panels.
Currently, solar power systems account for around 0.4 million tons of annual global zinc consumption, Wood Mackenzie said.
If global temperature rose 2.8 to 3 degrees Celsius by the end of this century, that number would rise to 0.8 million tons by 2040.
With a temperature increase limited to 2 degrees Celsius, zinc consumption would rise to 1.7 million tons per year by 2040. If warming were limited to 1.5 degrees Celsius, zinc consumption in the solar sector would rise to 2.1 million tons per year by 2040, analysts predicted.
Wood Mackenzie’s predictions for the three metals were based only on demand from the solar energy industry and did not speculate on total global demand.
Wlazly pointed out in Wood Mackenzie’s note on Monday that falling production costs and efficiency gains had lowered the price of solar power worldwide.
“As a result, solar power has become cheaper than any other technology in many parts of the US and several other countries around the world,” he said. “As costs continue to fall, the share of solar energy in the electricity supply will increase and displace other forms of generation. This offers a great opportunity for the base metal sector.”