Price increases may force China’s state-owned power giants to push projects to 2022; delays may cause global solar installations in 2021 to experience negative growth in 17 years
A group of Chinese manufacturers have proven themselves as global leaders in solar photovoltaic (PV) manufacturing in the first decade of the 21st century.
These young manufacturing companies—such as Suntech Power Holdings Co., Ltd., Yingli Green Energy Holdings Co., Ltd., Trina Solar Co., Ltd., and LDK Solar Co., Ltd.—are rapidly expanding. They cut costs faster than their competitors in other countries, and replaced industry leaders in the United States, Europe and Japan as the world’s major suppliers of solar photovoltaic panels.
The rise of China’s solar photovoltaic industry has strongly reshaped the global solar power landscape, which is not only reflected in the tariff war and industrial restructuring, but also in the increase in the use of solar panels worldwide.
China’s solar photovoltaic manufacturing accounts for approximately 71% of the world’s total production capacity: from 10 GW in 2010 to 106 GW in 2019. China is also a leading silicon wafer producer, accounting for 97% of the global market, 79% of photovoltaic cells and 67% of polysilicon.
Since the second half of 2020, the photovoltaic industry has experienced multiple rounds of price increases, from polysilicon to materials such as steel, aluminum, copper, photovoltaic glass and thin films.
Between July 2020 and February 2021, the quotations for 3.2 mm and 2 mm glass soared by more than 60% per square meter.
The prices of EVA (vinyl acetate) and POE (polyolefin elastomer) packaging films have risen by more than 40% and more than 10%, respectively. The price of silver paste has also risen by 7% and has remained high since then.
Due to the supply chain bottleneck formed under the new coronavirus disease (COVID-19) regulations, the increase in freight and transportation prices is another reason for the increase in photovoltaic prices.
The rapid construction and industrial recovery following the COVID-19 lockdown have exceeded the underutilized capacity, which has further increased prices. The cost of a container is now close to US$10, compared to US$1.5-2.0 per container earlier this year.
The price of silver, which is mainly used in the manufacture of silver paste, has remained high. Since silver has many industrial uses and is a precious metal as an investment, it will be affected by changes in supply and demand and market speculation.
As investor frenzy swept the market, silver prices soared at the end of January. iShares Silver Trust (SLV)-the largest exchange-traded fund that tracks silver-recorded prices as high as $26.70 per ounce.
Silver futures prices also rose to 29.90 US dollars. The retail boom has also led to the international trade association London Bullion Market Association (LBMA), which represents the global over-the-counter bullion market, with its silver spot price approaching $30.
The price of silver paste changes with the LBMA silver spot price curve. The rise in the price of silver paste in the second half of 2020 has not only pushed up the cost of batteries, but also pushed up the share of silver paste in the non-silicon cost of battery production. (as follows):
The core of the crisis is polysilicon, which is a kind of ultra-refined silicon, one of the most abundant materials on the planet, and is commonly found on beaches. As the solar industry prepares to meet the anticipated surge in demand for photovoltaic modules, polysilicon manufacturers cannot keep up.
The price of purified metalloid (silicon) has fallen from US$6.19 a year ago to US$25.88 per kilogram.
Due to the pandemic, photovoltaic demand may increase: some countries have already launched ambitious climate goals, and delayed projects are taking off. PV InfoLink, a solar photovoltaic market intelligence and research company, estimates that this year’s module demand will reach 153.8 GW, an increase of 10% over 2020.
Rising prices may force China’s state-owned power giants to push projects into next year. The delay may be large enough to make 2021 the first year of negative growth in global solar installations in 17 years.
Global projects that have not signed a price agreement with the power company that purchased the electricity may be delayed unless the customer is willing to pay a higher price for the electricity.
For the solar industry, the timing couldn’t be worse. Renewable energy finally won the White House, and Europe and Asia have announced ambitious climate goals.
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