The effect of critical material prices on the competitiveness of clean energy technologies

Clean energy technologies are widely recognized as a part of the solution for a sustainable future. Unfortunately, these technologies often rely on materials that are considered critical because of their importance to the technology and their potential for supply disruptions, which often lead to drastic and unexpected price spikes. With many clean energy technologies still struggling to compete economically with incumbent technologies, it is uncertain if such material price changes could have a significant economic impact on overall clean energy technology costs. In this paper, we first estimate material intensity of critical materials for three case study clean energy technologies: proton exchange membrane (PEM) fuel cells in fuel cell electric vehicles (FCEVs), neodymium iron boron (NdFeB) permanent magnets in direct drive wind turbines, and Li-ion batteries in battery electric vehicles (BEVs). Using these data, as well as material price information, we analyze technology-level costs under potential material price spike scenarios. By benchmarking against target costs at which each technology is expected to become economically competitive relative to incumbent energy systems, we evaluate the impact of price spikes on marketplace competitiveness. For the three case studies, technological costs could increase by between 13 and 41% if recent historical price events were to recur at current material intensities. By analyzing the economic impact of material price changes on technology-level costs, we demonstrate the need for stakeholders to push for various supply risk reduction measures, which are also summarized in this paper.