Journey of A Renewable Dollar
Journey of a Dollar in Renewable Energy Technologies
Solar PV: The Journey of a Dollar
The diagram shows how $1 invested in solar PV is distributed across the value chain. While 35% goes to manufacturing (primarily in China), this sector operates on thin margins (5-10%), generating only 2¢ of profit. In contrast, the downstream activities (65% of costs) generate higher profits with installation and development capturing 7¢ in total profit.
Key insight: While manufacturing accounts for 35% of costs and is largely done in China at low margins (5-10%), the downstream installation and development (65% of costs) offers higher profit potential for US/EU companies (10-15% margins).
Sources: Industry analyses (NREL, IEA, IRENA), NY Engineers, Rated Power, Go Spring Solar Now, Arka360
Wind: The Journey of a Dollar
The diagram shows how $1 invested in wind energy is distributed across the value chain. Despite representing 70% of the total cost, turbine manufacturers (OEMs) earn surprisingly low margins, with profit of just 2¢. Service contracts and long-term ownership of wind projects capture more significant profit, with project owners seeing 8¢ in long-term ROI.
Key insight: Despite turbines representing 70% of total costs, OEMs have struggled with profitability (Vestas had -8% EBIT in 2022). Project owners who capture value through electricity sales and service contracts tend to be more profitable in the long run.
Sources: Industry analyses (NREL, IEA, IRENA), Canary Media, Reuters, Windustry
Battery Energy Storage Systems (BESS): The Journey of a Dollar
The diagram shows how $1 invested in battery storage systems is distributed across the value chain. Upstream suppliers capture significant profits, with cell manufacturers (primarily in Asia) earning 8¢ in profit despite fierce competition. Raw material suppliers can see cyclical profits (3¢), while system integrators operate on much thinner margins (2¢) despite handling a large portion of the value chain.
Key insight: Upstream (miners) and midstream (cell manufacturers) capture significant profits in the BESS value chain. Chinese and Asian companies dominate manufacturing with strong margins (CATL: 26-31% gross), while integrators like Fluence operate on thinner margins (5-10% gross).
Sources: Industry analyses (NREL, IEA, IRENA), Cooperative.com, C&EN, CATL reports, SEC filings (Fluence)