- Major Chinese solar panel makers Longi Green, TCL Zhonghuan and Tongwei slashed prices by as much as 27% last month due to lower raw material costs.
- Europe is expected to benefit greatly from lower solar energy prices as the continent diversifies its energy sources to deal with disruptions in gas supplies from Russia.
Analysts said that the drop in solar panel prices in China, the world's largest producer, is expected to boost demand around the world, especially in Europe, which is experiencing an unprecedented energy crisis.
The China Silicon Industry Association said last week that China's largest silicon makers Longi Green Energy Technology, TCL Zhonghuan and Tongwei Solar cut prices by as much as 27% amid falling prices for key polysilicon due to oversupply.
The association said the sudden rise in Covid-19 cases affecting solar power installations and a glut of supplies at the end of the year caused some manufacturers to cut prices.
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A recent report by Shanghai-based BOCI Securities stated that “increasing the competitiveness of solar power generation due to increased production and lower costs for the upstream stage will help boost renewables worldwide.” .
According to the International Energy Agency, China produces and supplies more than 80% of the world's photovoltaic panels. The country plans to add at least 570 gigawatts of wind and solar power over the 14th five-year period from 2021 to 2025 as it aims to reach its carbon-neutral goal by 2060, when fossil fuels run out. Balance.
The European Union is expected to move away from fossil fuels faster after last year's unprecedented energy crisis when gas supplies from Russia fell. SolarPower Europe estimates that the region will add record solar capacity in 2022, up 47% from the previous year to 41.4 GW, and another 53.6 GW in 2023, bringing total solar capacity to 262 GW. Representing more than 280 organizations in the solar energy sector on the continent.
Longi's record-breaking solar cells will take years to reduce electricity costs
According to Frank Haugewitz, founder of Asia Europe Clean Energy (Solar) Consultancy, lower prices for solar energy components in China will support further expansion of renewables, as more than half of solar panels imported from the EU in 2022 will come from China.
Really lower prices are driving new demand not only in Europe, but also in other major markets in Southeast Asia, Middle East and Africa.
China needs to diversify out of PV systems to reduce global supply risks
The United States is likely to be an exception, as Washington imposes high tariffs on imports of Chinese solar panels and has banned solar components from China's Xinjiang region over fears of forced labor.
"Chinese solar panel manufacturers will continue to face import restrictions imposed by the US government for the foreseeable future," Hugowitz said.
"In this context, if the European Commission introduces a proposal to ban products made from forced labor next year, this could have serious consequences for the export of solar panels to Europe."
Liu Jing, an analyst at Shanghai-based Huajin Securities, said in a report last week that a domestic price war could cause temporary chaos among Chinese solar panel makers due to an imbalance between supply and demand. It could go wrong. It will run until February.
Lower prices may also affect the profitability of the sector to some extent.
While the price hike of China's solar sector may not repeat itself in 2023, continued technological advancement, increased digitalization and automation of manufacturing, lower material costs and economies of scale will ensure decent profits for Chinese solar manufacturers. to Haugwitz.
"Lower unit prices will create demand, especially for large-scale onshore projects with strong support from central and local governments to accelerate decarbonization in China," he said.
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This article originally appeared in the South China Morning Post (www.scmp.com), a leading news outlet covering events in China and Asia.
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