Supply chain woes, rising costs may cut solar panel output
The world’s biggest solar manufacturers are warning of looming panel shortages amid a snarled supply chain and rising materials prices.
Companies including Longi Green Energy Technology Co. and Trina Solar Co. said in an open letter that their output will be constrained because key component suppliers will be running at 70 percent in the near future. They’re asking customers to delay purchases and slow installations to avoid a rush to meet end-of-the-year deadlines.
The rare appeal reflects the stress that’s taxing supply chains in China and around the world. Higher costs for materials and delayed deliveries threaten to slow the deployment of solar panels just as world governments are getting more serious about fighting climate change. A panel shortage may also add to trade tensions between the U.S. and China after some shipments were detained at the U.S. border because of concerns over human rights violations.
“This plea is unprecedented and indicates how much stress Chinese manufactured goods supply chains are under,” Jenny Chase, head solar analyst at BloombergNEF, said by email.
The signees, which also included JinkoSolar Holding Co., JA Solar Technology Co. and Risen Energy Co., combined to account for more than half of all solar panel production last year, according to BNEF.
The latest hit to the solar industry is the surging price of industrial silicon. Prices have surged 300 percent since August after a top producing region in China throttled back output amid a power crisis. Prices for glass and adhesive film needed to make panels have also climbed.
“This imbalance will break the supply chain and seriously endanger the healthy and sustainable development of the industry,” the companies said in a statement.
The supply chain has been disrupted by shortages of materials and electricity to run factories. China’s central government officials ordered the country’s top state-owned energy companies — from coal to electricity and oil — to secure supplies for this winter at all costs. The order came from Vice Premier Han Zheng, who supervises the nation’s energy sector and industrial production. It was delivered during an emergency meeting this week.
A severe energy crisis has gripped many parts of the globe. In China, several regions have had to curtail power to the industrial sector, while some residential areas have even faced sudden blackouts. China’s power crunch is unleashing turmoil in the global commodities markets, fueling rallies in everything from fertilizer to silicon.