- Press Releases
August 25 (Renewables Now) - Prices of polysilicon, a key solar panel component, surged by 175% between January and mid-June 2021, and are expected to stay high through mid-2022, UK business information provider IHS Markit Ltd (NYSE:INFO) said in the summary of its latest solar market analysis.
Overall costs to produce solar panels rose 5.9% quarter-on-quarter in the first trimester of 2021, due to higher prices of other components in the module supply chain, including cells, wafers and glass, says IHS Markit.
For the consumer, this meant a 3.7% increase in the average selling price of a solar module in the first quarter of 2021.
However, module manufacturers had to face tighter profit margins over the same period even as customer demand grew significantly following the COVID-19 pandemic-related slowdown in early 2020.
Polysilicon prices are unlikely to come down before mid-2022, “when capacity will come online and ease the current bottleneck in the market”, says Edurne Zoco, an executive director in the Global Power and Renewables group at IHS Markit.
According to IHS Markit, higher solar module prices are fuelled mainly by the currently stronger demand for solar power, while the US-China solar trade war appears to influence only a part of the demand shifts.
The US Administration’s import-export ban imposed in June against a small group of Chinese polysilicon producers for using forced labour at factories in Xinjiang region are not expected to make a dent in China’s polysilicon production. IHS Markit says that China’s polysilicon capacity is expected to double by 2025 as demand for solar grows.
"Most new polysilicon capacity expansions currently happening in China are located outside of Xinjiang province," Zoco commented. The manufacturers are not only building new facilities outside Xinjiang to reduce risk, but also to become more independent from the region, according to Zoco’s analysis.