Australia’s solar market could be hit by a panel price shock as early as next month, industry experts warn, as global price increases driven by a prolonged shortage of polysilicon and other materials start to catch up with the local market.
The solar industry is being buffeted by a string of different price problems – in raw materials such as polysilicon, glass and silver, and even shipping costs.
Rami Fedda, a solar industry veteran and co-founder of wholesale distributor Solar Juice, said this week the Australian market should brace itself for at least a 10% hike in panel prices as cost increases already priced into the global market start to hit locally.
PV panel prices have been under almost constant pricing pressure since the onset of the Covid-19 pandemic in early 2020, from a relentless combination of inflated freight costs and shortages of key solar panel ingredients, including glass and polysilicon.
Fedda said that panel prices had already jumped in the global market, driving up the wholesale cost of solar PV from between 33 and 37 cents per Watt to the predicted price range of between 36 and 40 cents per Watt, depending on the value of the Australian dollar.
Australia has so far dodged most of this increase due to a favourable Australian dollar and the stockpile of older, cheaper modules. But if the dollar was to decline, and panel pricing pressures continued to mount, the local market could see a “double whammy and … a massive spike,” he said.
“[In an industry] where people are expecting prices to continually come down, they are probably going to get a bit of a shock,” Fedda told RenewEconomy – particularly for large-scale solar projects whose budgets have not factored in pricier panels.
“The price rise, in terms of US dollars, has already happened. So if the Australian dollar doesn’t strengthen further, or declines, people are going to get a bit of a shock with the pricing.”
Meanwhile, the external market pressures on PV module prices – 80% of which are based on the cost of raw materials – are showing no sign of letting up.
David Dixon, an analyst with Rystad Energy, said the per unit cost of shipping panels had quadrupled from a steady recent average of around half a US cent per watt peak, to 2 US cents per watt peak in 2021.
That means shipping now accounts for nearly 10 per cent of the total unit cost, up from 3 per cent in 2019.
“So the point is, the capex has gone up,” Dixon said at a Clean Energy Council event last week. “So that will start to challenge or eat into the margins of these projects, or delay the financial close and construction start of these projects.”
Dixon said he expected these price pressures to continue at least until the middle of the year, and possibly until the end of 2021.
According to China-based PV giant Jinko Solar, the shortages of raw materials like polysilicon, glass, EVA and silver will also continue and may become even worse in the coming months until demand dampens and upstream capacity rebalances.
In particular, the disrupted global supply of poly-silicon has spread to solar cell and panel production, as well as the downstream business, driving polysilicon prices announced by local major suppliers up another 10% since Q4 2020, despite facilities running at 100% capacity.
“After Chinese New Year, the glass price has not fallen a bit from its autumn highs while polysilicon continues to soar and the prices have been rising across the entire PV supply chain,” Jinko Solar said in an emailed statement.
“Recently, from the bidding prices submitted by many Chinese power plants investors in 2021, it
can be seen that the price of PV panels keeps rising across the board,” the company said, citing local bids for solar projects coming it at more than 1.8 RMB/watt ($A0.36).
“The outlook for module prices is also clear, several major players have anonymously adjusted their pricing strategy and confirmed that increases are inevitable which has been witness in latest bids in China,” Jinko said.