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Solar Module prices have risen by about 18 per cent since January.
- Rising polysilicon costs fuel the increase.
- The increase could delay projects and increase prices for new solar orders across the globe.
Last year, Solar energy was declared as the cheapest power source in the world. This was made possible due to the declining costs of solar panels over the past decade. However, this trend is experiencing a reversal. The prices of solar modules have increased by about 18 per cent since January. This increase may delay projects development and slow down solar uptake, coming as a setback when governments and investors are increasingly looking to clean energy to speed up economic recovery following the Covid-19 pandemic.
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A major factor for this increase has been the rapid rise in the cost of essential raw materials, notably polysilicon. Polysilicon is a refined form of silicon, an abundant material commonly found in beach sand. As the demand for solar modules has increased considerably, polysilicon producers have not been able to keep up, leading to a shortage and an increase in its price. According to data from PV Insights, the price of polysilicon have reached $25.88 per kilogram, a 318 per cent increase from $6.19 less than a year ago. The rise in the cost of other metals used in solar components manufacturing is also influencing the rise in solar energy costs.
This increase could affect projects across the globe. In India, about 10GW of projects may be impacted. Projects yet to have signed PPAs may get delayed or see an increase in the tariff proposed. Many stakeholders, however, believe that this is a short-term setback and believe that project development and orders will only see a small delay.
These shortages, however, have incentivised the addition of increased polysilicon manufacturing capacity. Xinte Energy Co recently announced the construction of the World largest Polysilicon manufacturing factory in inner Mongolia.