Solar panel prices, which have been rocketing since last year, will continue to soar at least till the second quarter of 2022 due to high input and freight costs as well as supply chain issues in China, domestic and international manufacturers said.
Price of polysilicon, the main raw material used to make solar equipment, has surged by 343% since July 2020 and by 148% since January, industry estimates show. This has resulted in module prices jacking up by 35%, putting more than 50 gigawatts (GW) of solar projects in India under strain, industry insiders said. The module prices have increased 15% so far this calendar year.
Experts attributed the spike in polysilicon prices to a fall in production in China.
“Polysilicon shortage has stemmed from the increased safety checks in China (especially on smaller and more unorganised markets), explosions over the course of last year in the facilities of two Chinese polysilicon producers, and closing of manufacturing units in China due to financial stress caused by the pandemic,” said Hetal Gandhi, director at credit rating agency Crisil Research.
“This was coupled with a surge in commodity prices such as copper and aluminium (used in mounting structures and other components, accounting for 5-10% of overall cost for solar projects) which also added to the price increases,” she said.
The prices of solar glass, another important component used to manufacture solar cells, has also risen by nearly 130% since June 2020.
“Currently, majority of the solar energy capacity in India has been built on imports,” said Gyanesh Chaudhary, managing director of Kolkata-based solar energy firm Vikram Solar.
“One of the world’s largest glass makers is in India, but we import glass from China, Indonesia or Malaysia,” he said. “Similarly, even though India is one of the largest aluminium producers in the world we import aluminium frames.”
Vikram Solar currently has a manufacturing capacity of 1.2 GW, and plans to expand this to 4.2 GW in the coming years.