China’s Solar Giants Say Industry Needs to Fight Cost Inflation

The heads of some of China’s largest solar makers pressed the industry to reduce costs as raw material inflation boosts panel prices for the first time in eight years.

Manufacturers like Trina Solar Co. and Longi Green Energy Technology Co. said rising prices are creating problems for their customers, solar’s end-users, and that companies in the supply chain need to improve cooperation to better balance supply and demand for materials.

China’s Solar Giants Say Industry Needs to Fight Cost Inflation

The executives spoke at the SNEC International Photovoltaic Power Generation and Smart Energy conference in Shanghai on Wednesday, in the midst of solar power’s worst bout of inflation in more than a decade. Solar module costs have risen 21% since the start of the year, potentially causing developers to delay projects.

“The continuous surge in raw material costs this year has created a very big hassle for our end-customers,” said Gao Jifan, chairman of panel-maker Trina. “We need to break the trend as soon as possible.”

The key culprit behind rising prices is polysilicon, the ultra-conductive material that’s the main component in photovoltaic panels. Prices have more than quadrupled in the past year as surging demand for new solar power has outpaced production capacity.

The material’s meteoric price rise is causing concerns over supply security, Longi Chairman Zhong Baoshen said during a panel discussion at the conference.

The fix, according to Zhong, is for polysilicon makers to invest in more capacity, while the companies that buy polysilicon need to slow their spending to improve the supply-demand balance.

Prices may stay high through the rest of the year, but the supply shortage should ease in 2022 and 2023 as new factories come online, BloombergNEF analyst Yali Jiang said in a note Wednesday.

©2021 Bloomberg L.P.

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