Also this year we can observe that the prices of any kind of solar products are steadily increasing. This price increase is due to more expensive raw material prices. According to Martin Schachinger, three to four price increases can be recorded within the last 6 months. However, an end of steadily increasing raw material prices would not be in sight for a long time yet.
This naturally raises the question for us, why prices are constantly rising this year as well, and what impact this will actually have on the future of the solar industry market. We want to answer these and some other questions in this article.
Solar module prices rise steadily in China and throughout Europe – Jinko Solar and Canadian Solar report
Well-known manufacturers such as Jinko Solar and Canadian Solar are also making critical analyses regarding the individual price increases. Dany Qian, vice president of the Chinese solar module manufacturer JinkoSolar reported that the prices of PV modules within China have increased by up to 15% in recent weeks. Moreover, this percentage is expected to continue to increase in the coming weeks. According to Qian, such price increase depends on various factors. She cites the following factors in this regard:
- Shortage of supply of module frames and raw materials such as polysilicon, glass and silver, for example.
- Lack of manufacturing capacity
- construction of additional factories and production lines by raw material producers, which takes a lot of time
- continuous decline of the U.S. dollar, due to various stimulus measures to alleviate public hardship during the pandemic
Canadian Solar alsod stated that polysilicime prices have increased by 25%. Not only is the U.S. dollar losing value, but so are other currencies such as the euro and Japanese yen. Yan Zhuang, president of Canadian Solar emphasized that this drop is extremely damaging to their own margins. Canadian Solar was nevertheless able to absorb the high prices well by sharing costs with customers and partners. In addition, Zhuang optimistically points out that although raw material prices are still expected to rise, prices for solar glass are now beginning to fall and the first signs of normalization in shipping costs can be seen.
In addition to the factors listed by both manufacturers for the constant increase in costs, however, other circumstances also played a major role. These include, above all, the ongoing worldwide Corona pandemic. During the individual lockdown phases, the solar industry was not spared supply bottlenecks. Raw materials such as polysilicon in PV glass were particularly affected. During the last year, individual well-known manufacturers brought high-performance modules onto the market. In 2020, more than 100 GW of new capacity was installed. China alone installed around 48 GW. Here, an increase of 60 percent was recorded in contrast to the previous year 2019. Individual developers plan to increase capacity globally by at least 15 percent in 2021. As soon as solar energy becomes competitive without subsidies and these could impact project plans, module costs will also rise here.
Impact of steadily rising commodity prices on the future of the solar industry
We have now established that a steady increase in the price of raw materials and the resulting solar modules is unstoppable at the current time. But now the question arises, what kind of impact does a constantly rising raw material price actually have on the future of the solar industry?Let us now take a closer look at this.
According to an article in PV Magazine from February 23, 2021, it is feared that the constantly rising prices could lead to a rethink among module manufacturers. It is expected that some manufacturers could look for alternatives or at least reduce silver consumption in the metallization of solar cells. One alternative could be a copper-nickel alloy, but this could take a long time to become truly sustainable. In general, this silver shortag e need not bother the PV industry as long as efforts to reduce the metal content in solar modules continue. In a study from Frontiers Energy Research magazine, researcher Samuele Lo Piano and his fellow scientists emphasize that if the price of silver were to suddenly rise, the industry would have several options to reduce silver use to 0. However, this raises the question of how quickly such an implementation could occur. In addition, it should be noted that silver processing has been fundamentally reduced in recent years. In a report published in June 2018, an analyst had shown how the amount of silver required by the photovoltaic industry could drop from 130 milligrams per cell in 2016 to about 65 milligrams in 2028. According to a recent University of Kent study, silver accounts for about 6.1 percent of the total production cost of solar modules. According to BloombergNEF, the metal accounts for about 4.7 percent of the cost of a module.
Further, there are concerns that rising commodity prices within China could spread overseas.
Cost-cutting targets in the U.S.
According to an Argusmedia Group article, solar power could account for 30-50 percent of U.S. electricity by 2035. Because of the resulting costs, the U.S. Department of Energy (DOE) has set a cost reduction target of 60% within the next 10 years. In addition, provide $128 million in funding to the domestic industry. This is intended to reduce equipment costs and generally accelerate deployment. More specifically, you have set a goal of reducing costs to 3¢/kWh by 2025 and 2¢/kWh by 2030. The following table represents each funding sector.
|Funding in U.S. dollars
|Development of thin-film cadmium telluride (CdTe) modules as an alternative to silicon.
|20 Mio. US-Dollars
|22 Research and development projects to develop perovskite technology using lightweight calcium titanium oxide or similar compounds that are more efficient and cost less than crystalline silicon
|40 Mio. US-Dollars
|Provide projects to improve silicon-based PV system components to extend life from about 30 years to 50 years. Energy and waste costs should be reduced as a result.
|7 Mio. US-Dollars
We now had to conclude that a price increase of raw materials in the photovoltaic industry can hardly be stopped and avoided in the near future. Especially the Corona Pandemic played a major role in this. However, it is possible to deal with such a price increase in a sustainable way with regard to the future. The cost reduction targets of the USA are a pillar in the right direction.
Emiliano Bellini ? PV-Magazin; Solar modules prices rose by up to 15% in China, Jinko?s vice president says; 03.03.2021; https://www.pv-magazine.com/2021/03/03/solar-modules-prices-rose-by-up-to-15-in-china-jinkos-vice-president-says/
Emiliano Bellini ? PV-Magazin; Rising prices may push PV industry away from silver; 23.02.2021; https://www.pv-magazine.com/2021/02/23/rising-prices-may-push-pv-industry-to-move-away-from-silver-use/
PVTECH; Raw material shortages causing solar module bidding prices to rise in China; 12.03.2021; https://www.pv-tech.org/raw-material-shortages-causing-solar-module-bidding-prices-to-rise-in-china/
Nicole Willing; Raw material shortages causing solar module bidding prices to rise in China; 29.03.2021, https://www.argusmedia.com/en/news/2200464-rising-input-prices-halt-longterm-drop-in-solar-costs