Polysilicon leads the rise in raw material prices multinational photovoltaic projects are facing delay

Affected by the transmission of commodity prices, the end of the price reduction trend of photovoltaic products in the past decade also makes the popularization of green energy face a turning point.

The price of solar panels rose 15.4% year-on-year in the year to mid-May, the first rebound after falling costs over the past seven years, according to research firm PVInsights. Although this round of commodity price increases has been on the rise since last year, the deteriorating supply chain situation has finally had a significant impact on the cause of emission reduction.

The quadrupling of polysilicon in a year is only a microcosm of the rising prices of commodities.

According to media reports, polysilicon is at the center of the commodity price crisis. As a super-refined form of silicon, although the raw materials of this kind of goods are not rare, but under the influence of the photovoltaic industry eager to expand capacity, suppliers have been unable to meet the expanding demand. The current price of polysilicon has hit $25.88kg, down from as low as $6.19a year ago, according to PVInsights.

The team of Roth Capital Partners analysts had expected the price of polysilicon to remain strong until the end of 2022.

The problem is clearly not just polysilicon. Solar panel maker Maxeon Technology says the industry is facing widespread upstream cost pressure. Steel, aluminum, copper and even freight rates are on the rise. Photovoltaic micro-inverter supplier Enphase Energy also said that due to the limited supply of semiconductor raw materials, the company expects shipments to decline.

High prices force a large number of projects to be postponed

In an earnings call last week, Ates made it clear that high prices would lead to a setback in demand and that some large projects would be delayed. At the same time, some developers also say that about 10 megawatts of photovoltaic projects in India are affected by price factors, accounting for about 1/4 of the country's total installed capacity. Analysts at Cowen, a financial services firm, also said there were signs of delays in large photovoltaic projects in the United States.

Solarzoom, China's new energy industry platform, also pointed out when interpreting the photovoltaic policy last week that high costs may lead some big energy giants to postpone some projects until next year. Therefore, 2021 will be the first significant negative growth of global photovoltaic in the past 17 years.

A similar conclusion can be drawn from the retrogression of the cost of electricity. Sun Xiaojing, a senior analyst at Wood Mackenzie, said that unless customers are willing to pay higher electricity prices, projects around the world that have not yet signed feed-in tariff agreements with utilities may be forced to be delayed.

The prospect is still promising after the price factor has eased.

Although the trend of falling costs has been interrupted in recent years, some companies in the industry still see the change as a short-term factor. Nitin Apte, CEO of Vernon (Vena Energy), said the company will not slow down construction (because of price) and is looking for ways to lock in projects at the best price it can get.

Nitin said that it can be expected that after commodities like polysilicon have experienced a rise on this scale, capacity will continue to enter the system, and the biggest challenge is how to make capacity perfectly match the timing of growth.