When the World needs Solar Energy the Most, its Growth Dwindles

    Article Overview

    Rising prices and as the trade war worsens, the sector is finding it difficult to grow faster and get cheaper as the consumers want it to be according to Bloomberg News. Gaps are widening in the solar industry across the globe threatening an impending flattening growth trajectory when the world is in urgent need of clean power.

    Three prime factors that have been affecting adversely the sector include the increasing cost of the materials, trade war that is worsening, and labor accusations, all hitting this sector simultaneously. This has resulted in increasing panel prices for the first-ever in several years. Some of the manufacturers have also asked clients to defer the purchases if possible.

    Although, the installations every year are higher, however, Wall Street has warned that the pace at which the sector is expanding is slower since it is facing a lot of obstructions and the pace may slow down further if these hitches are not arrested.

    As per Bloomberg News, the setbacks or the hitches are only temporary, and the installation delays are expected to get back to normal by the 2022 end. This is the time when other solar factories will help to ease out the supply chain hiccups.


    However, it is also being apprehended that any hiccup in the rollout might have a longer effect when emissions from burning the fossil fuels get burnt instead of the heat being trapped in the atmosphere. In the year 2020, solar provided 3.3% of the global electricity requirement. BloombergNEF assesses that to attain the target for net zero by the year 2050, at least 455 gigawatts of solar energy will be needed annually through 2030.

    Last year, however, was a record with only 144 gigawatts being added. These glitches are showing up just before the United Nations’ COP26 talks on climate that are scheduled to begin later this month. These talks are being regarded as many as crucial because they might perhaps be a last attempt to minimize global warming.

    Joe Biden’s becoming the President, Green Deal of Europe, and China’s 2060 net-zero pledge implied that for the first time that the above three economies supported energy transition simultaneously.

    Due to the painstaking efforts of researchers and scientists carried on for decades, solar can produce energy that is way cheaper as compared to fossil fuels across the globe. The demand and the supply chain have not been able to match. One of the attributable factors is polysilicon, a highly conductive material refined in factories using caustic chemicals and energy derived from coal. It is mostly found in China.

    In January, Toni Fei, an analyst at BOCI Research Ltd said that these polysilicon factories could only churn out enough for an ingredient that would generate 170 gigawatts of panels, a figure which is much lower than the experts had estimated.

    A power crisis triggered by a coal shortage has cut the supplies for the metals that are required for making polysilicon, pushing the prices even higher up. An increase in costs of freight, steel, and aluminum have also added to the rising costs. This has resulted in price increase ever since 2013.

    All the glitches mentioned above reflecting in the analysts’ forecasts. For instance, Guggenheim Securities LLC has removed the buying rate on four solar rocks, rising risks in 2022 revenue being cited as one of the factors.

    Towards the beginning of this month, Daiwa Capital Markets dropped its forecast by 15 gigawatts for the 2021 installations. Citigroup and Morgan Stanley have also become cautious about the near term China’s demand, which is the largest solar market in the world. However, the United States will continue with the rate of installation by 3.2% next year following a 58% jump in 2021, as per Bloomberg NEF.

    Aside from the above instance when polysilicon is being blamed, there is a second instance when polysilicon has found itself in controversy. Half of the globe’s supply is made in Xinjiang, a controversial region in western China.

    That has led to the glitches in June when the Biden administration halted imports of the materials manufactured by Hoshine Silicon Industry Co., which is responsible for supplying feedstock material to many polysilicon makers.

    Agents of the US customs started issuing WRO or withhold release orders to stop China-linked solar panels at the borders and this issue remains unresolved to date.

    The five biggest panel makers of China that constitute almost half of the supply of the world asked consumers to defer purchases to prevent supply chain debacle in an open letter.

    However, Bloomberg News says that it is not all “gloom and doom” for the solar sector. Although, there is a hike in prices of the solar panels, yet they are still cheaper than what they used to be in October 2018, and the installations continue to take place an inch higher. Also, the solar companies continue to make improvements in technology that assure improvements in costs in the future.

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