Wind and solar prices in major global markets have climbed nearly 30 percent in the past 12 months as developers grapple with supply chain disruptions and the challenges posed by soaring costs for everything from transportation to components to labor, according to a report released Wednesday by LevelTen Energy, a U.S. renewable energy trading platform.

A quarterly index of Renewable Energy Purchase Contracts tracked by LevelTen Energy shows that contract prices for renewable energy have risen by 28.5 per cent in North America and 27.5 per cent in Europe over the last year. In the first quarter of this year alone, they rose by 9.7 per cent in North America and 8.6 per cent in Europe.

The economic, logistical and labour market disruptions caused by the Newcastle pneumonia outbreak and its blockade have continued to worsen since the outbreak of the crisis in Ukraine, reversing a decade-long trend of falling costs in the renewable energy sector. The United Nations has consistently called for the expansion of clean energy production to avoid the worst effects of climate warming, and higher costs are likely to slow the growth of renewable energy demand.

This has exacerbated the challenges facing the renewable energy industry in North America, where the industry is unsure whether US lawmakers will extend tax breaks for renewable energy facilities. Developers are also concerned that an investigation launched this year by the US Department of Commerce could lead to tariffs being imposed on solar panels imported from Asia, driving up costs.

Reagan Farr, chief executive of US solar developer Silicon Ranch, said, “Right now, we have intractable problems in our supply chain.”

In Europe, the crisis in Ukraine has led governments to try to reduce their reliance on Russian gas (1.1, 0.00, 0.00%), which has further boosted strong demand for renewable energy. Oscar Perez, a partner at Spanish fund manager and renewable energy developer Q-Energy, said the conflict could be the “last straw” for the sector as price pressure on renewables is already high.

Raymond James analyst Graham Price said the rising cost of renewable energy in Europe, coupled with the adoption of aggressive climate policies in Europe, should increase the attractiveness of expensive, environmentally friendly technologies such as hydrogen and biofuels.

LevelTen Energy believes that, for the time being, soaring renewable energy prices are not slowing demand. A survey of 21 sustainability and energy consultants conducted by the company revealed that 75% believe their clients have accelerated or continued to maintain renewable energy procurement programmes.

It’s not about demand,” says Luigi Sacco, director of Milan-based architecture and design firm PPA. The demand is still there, it’s just that several markets are struggling a bit with supply.”

One factor attracting buyers to renewable energy is the soaring cost of fossil fuels. Farr said, “The current readily available alternative to renewables for power generation is natural gas, but the price of natural gas has also doubled.”