A key selling point that made solar energy the fastest growing energy source in the world (costs are falling rapidly) has affected speed.
Solar module prices have risen 18% since the beginning of the year after falling 90% in the previous decade. Investment, driven by a quadrupling of the cost of key commodity polysilicon, threatens to delay projects and curb solar energy capture just as several major governments are putting their weight behind in an effort to curb change climate.
“Solar disruption hasn’t been that bad in more than a decade,” said Jenny Chase, chief analyst at BloombergNEF’s clean energy research group. “Developers and governments will have to stop waiting for solar power to go down much faster.” BNEF slightly lowered its solar accumulation forecast this year in a report last week, citing rising material prices, including polysilicon as a reason.
Higher prices affect demand and may delay some large-scale projects, panel maker Canadian Solar Inc. said Thursday. In India, about 10 gigawatts of projects could be affected, which equates to more than a quarter of the country’s current capacity, according to Mint, which cites unnamed developers. Large-scale projects in the United States could also be postponed, analysts at Cowen & Co. said.
According to Xiaojing Sun, an analyst at Wood Mackenzie Ltd., projects that have not signed price agreements with energy-buying utilities could be delayed unless the customer is willing to pay a higher tariff 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 targets have been announced across Europe and Asia.
At the heart 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 prepared to meet the expected increase in demand for modules, polysilicon manufacturers were unable to keep up. According to PVInsights, prices of purified metalloid have reached $ 25.88 per kilogram, up from $ 6.19 less than a year ago.
According to analysts at Roth Capital Partners, including Philip Shen, polysilicon prices are expected to remain until the end of 2022.
And the problem is not limited to polysilicon. The solar industry faces “widespread supply chain cost challenges,” panel maker Maxeon Solar Technologies Ltd. said in April.
Solar panels are made from heated and purified sand to ultraconductor polysilicon ingots that are cut into thin wafers, connected to cells, and mounted on roof-mounted panels and cover extensive fields.
Prices for steel, aluminum and copper, as well as transport costs, are also rising. Solar microinverter supplier Enphase Energy Inc. said it expects its shipping volumes to be limited by the availability of semiconductor components.
“Downstream of polysilicon, it’s very painful,” Canadian Solar Vice President Xiong Haibo said at a conference in China, according to the Solarbe industry publication. “Currently, none of the later companies are profitable and they all reduce production.”
However, the brunt of the long-term downward trend in costs is partly offset by a continuous improvement in the efficiency of solar panels, said Nitin Apte, CEO of Vena Energy Pte., One of the major operators independent renewable energy companies in Asia-Pacific. . The company does not anticipate delays this year in its solar projects in Japan, Taiwan, Australia and India.
“I see it as a short-term situation, and some projects could be seen to affect our contingencies,” Nitin said in an interview at his Singapore office. “We are not stopping construction. We block orders at the best prices we can get. “
In the longer term, the shortage favors the construction of new polysilicon factories, including this month’s announcement of what would be the world’s largest facility in China.
“It is to be expected that any material that has the type of growth that polysilicon has had will continue to have injection capacity into the system,” said Nitin of Vena. “The challenge is to synchronize that capacity perfectly for growth.”