Semiconductor shortages could impact green energy plans – Cyclops Electronics warns

Due to electronics shortages and price increases caused by the pandemic and geopolitical tension, Great Britain’s 2030 clean energy commitments may not be achieved.

The UK government is aiming for 95 per cent low-carbon electricity generation by the next decade. The government is also aiming for the share of car sales that are fully electric to be 80 per cent by the same deadline.

Both the US and the UK are pushing to make more electronic components domestically too. Currently, the gadgets we use all contain electronics produced in Asia. This meant that when the pandemic occurred, and those factories were shut down, production chains stopped. As the shortage worsened in the early days, import costs also skyrocketed.

By relocating production closer to home, not only would companies be helping their economy, but they would also be in a better position should anything happen to the supply chain again.

These goals may be compromised by the current shortages and supply chain issues facing the electronics sector. The semiconductors needed to manufacture EVs, solar panels and wind turbines are in short supply.

Many electric car companies have pulled new models or have had to halt production due to a lack of semiconductors. Prices of current models have also risen in an attempt to keep up with the price hikes of raw materials. EV prices in January 2022 were up 54.1 per cent compared to the year before thanks to rising fuel prices - the EV price rose to meet them.

A regular fuel-powered car would use around 300 to 1000 chips, while an electric car would use up to something like 3,000. While some car companies decided to close production facilities, others instead reduced the electronic parts used in their vehicles to meet targets.

Similarly, the cost of renewable energy devices like wind turbines and solar panels have increased too. Thankfully, many residential customers have not been as affected as businesses.

Renewable energy sources, like solar panels, are often applauded for the cost saving they provide over time after the initial installation cost. However many of the materials that go into building solar panels, like silver, aluminium and steel, are facing price hikes. These costs, when passed on to the consumer, may make solar power unattainable for some.

Supply shortages were first really noticed during the pandemic, when manufacturing facilities were forced to shut down to stop the spread of COVID-19.

Every industry felt the pressure, as food prices, energy bills and many other costs for consumers rose exponentially. Electronic parts that had cost less than a pound in previous years were suddenly worth hundreds, and things that were plentiful were now in short supply.

These supply issues were then exacerbated by the start of the conflict between Russia and Ukraine, two countries that have a monopoly on several materials needed for chip production.

These issues, combined with the UK’s own manufacturing facilities in the middle of a controversial acquisition, puts the country’s green aspirations in a precarious position.

Britain’s largest chip-making facility, the Newport Wafer Fab, was recently sold to Chinese firm Nexperia in a highly debated move. Under certain national legislation this acquisition is being contested due to concerns of the tech being owned by China. Anything produced there will then be Nexperia’s property, and may not go to projects within the UK.

But there is a light at the end of the tunnel. Chip prices are finally starting to decrease as stocks reach manageable levels, and more chips will never be a bad thing!

Cyclops Electronics is a UK-based firm working in the fast-paced electronics market. You can find out more about the firm and what they can do to help your business here.