Impact of rising material costs on modules in the distribution market in the Middle East
08 Sep 2021

First Published on Utilities

Robin Li – General Manager for Middle East & North Africa, JinkoSolar, says that the price of silicon has risen sharply over the past few months, a trend that could drive up costs of solar projects

There has been discussion over the past couple of months on potential rise in costs of developing solar due to increasing silicon costs.

In 2021, due to the imbalance of supply and demand of upstream silicon, the price of silicon have risen several times rapidly, resulting in the increase of module cost and price, which will bring a certain impact on the Middle East market and the global photovoltaic industry this year.

However, I think the market turbulence in this year is temporary, because the supply and demand relationship of the global photovoltaic upstream and downstream industry chain has been in the process of subtle change and dynamic balance. That is, with the gradual release of production capacity, the price will return to a reasonable range.

From the perspective of the global market in the future, with the requirements of carbon emission reduction and the further improvement of photovoltaic plus energy storage economy, the global photovoltaic installed demand will maintain a steady growth.

Clean energy, represented by photovoltaic, will become one of the main driving forces for global energy structure transformation and economic recovery in the post-epidemic era.

Causes and effects of rising material costs of solar on potential development of projects.

For instance, some utility-scale projects may be delayed to 2022 or even 2023, after the component price returns to a reasonable level because the current price cannot support the continued development due to the low pre-budget cost. But demand for modules remains strong in the distribution market and in some countries.

The change of the solar landscape in the region in the future.

20-30% of projects worldwide will be affected by the increase in modules costs and prices in 2021, resulting in some degree of delay or cancellation.

However, this special situation does not bother the future growth of the PV market. Many institutions predict that the global installed capacity of photovoltaics in 2022 will be around 200GW at the DC side, so I am confident about the PV market in 2022, especially in the Middle East region.

How to tackle this?

  • From the perspective of the company, the layout and penetration of the whole industrial chain is very important, which can effectively grasp the factors such as product quality/cost/capacity, etc.
  • Actively improve product power, build high energy density products to effectively reduce LCOE/ improve return on investment, and form technology competition, product competition, service competition, rather than pure module price competition;
  • Call for a scientific and rational layout of the global industrial chain and production capacity to resist industrial shocks.