- Leading Chinese solar panel makers Longyi Green, TCL Zhonghuan and Tongwei cut prices by 27 percent last month due to product price cuts.
- Europe is expected to benefit significantly from lower solar prices as the continent diversifies its energy sources to cope with a cut in gas supplies from Russia.
Falling solar panel prices in China, the world's largest producer, are expected to boost global demand, especially in Europe, which is facing an unprecedented energy crisis, analysts said.
The China Silicon Industry Association reported last week that top Chinese manufacturers Longyi Green Energy Technology, TCL Zhonghuan and Tongwei Solar cut prices by 27 percent as costs fell due to a glut of key polysilicon materials.
The association said the slowdown in demand was due to an increase in Covid-19 cases affecting solar panels and a supply glut at the end of the year, prompting some manufacturers to cut prices.
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"Increased competitiveness of solar power generation, driven by increased production and lower start-up costs, will help promote renewable energy around the world," Shanghai-based brokerage BOCI Securities said in a recent report.
China produces and supplies more than 80 percent of the world's photovoltaic modules, according to the International Energy Agency. The country will add at least 570 gigawatts of wind and solar power between 2021 and 2025 in its 14th five-year plan as it aims to reach its goal of carbon neutrality by 2060, when non-fossil fuel sources make up 80%. percentage of total energy balance.
The European Union is also expected to diversify away from fossil fuels faster after last year's unprecedented energy crisis caused by cuts in gas supplies to Russia. The region will add a record 41.4 GW of solar in 2022, up 47 percent from last year, and a further 53.6 GW in 2023, bringing total solar to 262 GW, according to Solar Power Europe, equivalent to more than 280. the entire sunny side of the continent.
Longi's record solar panels will take years to reduce energy costs
According to Frank Haugwitz, founder of Asia Europe Clean Energy (Solar) Advisory, lower prices for solar components in China will boost the use of renewable energy, as more than half of the solar modules imported from the EU in 2022 Made in China.
"Lower prices will really stimulate new demand not only in Europe, but also in other key markets in Southeast Asia, the Middle East and Africa," he said.
The world needs to diversify China's solar generation to reduce supply risks
The United States may be an exception, as Washington imposes high import tariffs on Chinese solar panels and bans solar components from China's Xinjiang region due to forced labor.
"Chinese solar panel manufacturers will face import restrictions imposed by the US government in the near future," Haugwitz said.
"In this context, if the European Commission comes up with a proposal next year to ban products manufactured with forced labor, this could also have a significant impact on solar module exports to Europe."
Domestically, the price war could temporarily hurt Chinese solar wafer makers due to an imbalance between supply and demand, Liu Jing, an analyst at Huajin Securities in Shanghai, wrote in a report last week. It lasts until February.
The sector's profitability is likely to be partly affected by low prices.
Even if profits are unlikely in 2023 due to rising prices in China's solar industry, continued technological advances, greater digitization and automation of production, reduced material use and economies of scale will ensure decent profits for Chinese solar manufacturers. to Haugwitz.
"Low module prices will create demand, especially for large land projects supported by both central and local governments to promote China's rapid decarbonisation," he said.
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This article was originally published by the South China Morning Post (www.scmp.com), a leading news outlet in China and Asia.
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