Prices for solar modules have risen 18% since the start of the year after falling 90% in the previous decade. The reversal, fueled by a quadrupling in the cost of the key raw material, polysilicon, threatens to delay projects and slow adoption of solar power, just as several major governments are finally throwing their weight behind it in a effort to slow climate change.
“The disruption of solar power hasn’t been this severe in over a decade,” said Jenny Chase, chief solar analyst at the BloombergNEF clean energy research group. “Developers and governments are going to have to stop expecting solar power to get much cheaper quickly.” The BNEF lowered its forecast for solar accumulation slightly this year in a report last week, citing rising prices for materials, including polysilicon, as one reason.
Rising prices are affecting demand and could delay some large-scale projects, panel maker Canadian Solar Inc. said on a call for results on Thursday. In India, around 10 gigawatts of projects could be affected, which is equivalent to more than a quarter of the country’s current capacity, Mint reported, citing anonymous developers. Large-scale projects in the United States could also be postponed, analysts from Cowen & Co.
According to Xiaojing Sun, an analyst at Wood Mackenzie Ltd., projects that have not signed a price agreement with the utilities that purchase the electricity could be delayed unless the customer is willing to pay a higher tariff. high for electricity.
For the solar industry, the timing couldn’t be worse. Renewable energies finally have a champion in the White House and ambitious climate goals have been announced in Europe and Asia.
At the center of the crisis is polysilicon, an ultra-refined form of silicon, one of the most abundant materials on Earth commonly found in beach sand. As the solar industry braced for an expected increase in demand for modules, polysilicon manufacturers have been unable to keep pace. Prices for the purified metalloid have hit $ 25.88 per kilogram, down from $ 6.19 a year ago, according to PVInsights.
At the center of the crisis is polysilicon, an ultra-refined form of silicon, one of the most abundant materials on Earth commonly found in beach sand.–
Polysilicon prices are expected to remain high until the end of 2022, according to analysts at Roth Capital Partners, including Philip Shen.
And the problem is not limited to polysilicon. The solar industry faces “pervasive upstream supply chain cost challenges,” panel maker Maxeon Solar Technologies Ltd. said in April.
Solar panels are made from heated sand and purified into ultra-conductive polycrystalline silicon ingots that are cut into razor-thin slices, wired into cells and then assembled into panels that rise to rooftops and cover vast fields.
The prices of steel, aluminum and copper are also on the rise, as are transport costs. Solar microinverter supplier Enphase Energy Inc., said it expects its shipping volumes to be limited by the availability of semiconductor components.
“Downstream from polysilicon, it’s very painful,” Canadian Solar vice president Xiong Haibo said at a conference in China, according to industry publication Solarbe. “Right now, none of the downstream companies are profitable and all of them are cutting back on production.”
Nonetheless, the interruption of the long-term downward trend in costs is partly offset by continued improvement in the efficiency of solar panels, said Nitin Apte, CEO of Vena Energy Pte., A leading independent operator of solar panels. renewable energy in Asia-Pacific. . The company does not anticipate any delays this year in its solar projects in Japan, Taiwan, Australia and India.
“I see this as a short-term situation, and a few projects could see this eat away at our contingencies,” Nitin said in an interview with his office in Singapore. “We are not slowing down construction. We block orders at the best possible price. “
Longer term, shortages are spurring construction of new polysilicon plants, including the announcement this month of what would be the world’s largest facility in China.
“You would expect that any material that has the type of growth that polysilicon has had would continue to have a capacity injected into the system,” said Vena’s Nitin. “The challenge is to perfectly synchronize this capacity with growth.”
– With the help of Rajesh Kumar Singh and Rachel Morison.