(Bloomberg) — Look just beneath the surface of many of the technologies powering the energy transition and there’s a red metallic glint. Copper is a vital part of green infrastructure from grids to wind turbines, and a recent price surge threatens to make decarbonization more costly.
Copper has doubled from the lows seen a year ago and is near a nine-year high. Amid predictions of a new commodity supercycle kicking off, many analysts say the top hasn’t yet been reached for a metal that’s core to the green energy drive.
Demand from renewable power generation, battery storage, electric vehicles, charging stations and related grid infrastructure accounts for about a fifth of copper consumption, according to Citigroup Global Markets Inc.
With governments aiming for aggressive net zero emission targets in the coming decades, that means more clean electricity, a shift that’s likely to be copper-intensive given the $28.7 trillion grid build out required.
Part of that growth will come from the need to connect new renewable power plants with customers. That’s because it’s often cheapest to build such plants wherever the wind or sun resource is strongest, which could be in the middle of the sea or an isolated desert.
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