“Era of record low solar bids may be over,” solar investor warns market

One of Australia’s largest solar investors has warned that prices for new solar projects could be about to increase for the first time in more than a decade.

During an investor briefing on Tuesday, the ASX-listed New Energy Solar said it expected the cost of solar modules in the United States to increase for the first time in more than a decade.

“Era of record low solar bids may be over,” the company’s presentation says.

The company said a growth in construction activity globally had put pressure on other materials used in the construction of solar farms, including concrete, steel and aluminium, further contributing to upward pressure on the cost of new solar farm construction.

New Energy Solar pointed to analysis from Bloomberg New Energy Finance, which found that global solar module prices had increased by around 19 per cent in the early months of 2021, reversing a decade long trend of falling solar costs.

New Energy Solar CEO Liam Thomas told the investor briefing that a crack down on forced labour practices, with several major Chinese factories facing allegations exploitative work practices, could also contribute to higher solar module prices.

“After a decade of continuously falling prices for solar, as well as the revelations of the use of forced labour in the production of some raw materials for solar modules, it looks as if solar module pricing may be levelling off,” Thomas said.

“Additionally, there is a global construction boom putting pressure on the availability of other materials like steel, aluminium and copper. These pressures are likely to impact the pricing of new solar build later in the year and may eventually impact forward electricity pricing.”

Despite the potential for increases in solar module prices, New Energy Solar said a push to decarbonise energy systems and ongoing competitiveness with other energy sources, is likely to see demand for new solar generation remain strong, and the company remained very optimistic about the future for solar investment in the US market.

BloombergNEF has also confirmed that electricity supplies from new build wind and solar projects are likely to remain cheaper than power produced from existing coal and gas generators.

New Energy Solar said it still remained bullish about the future demand for new solar projects, particularly in the United States, which are being driven by demand for cheaper energy supplies and support for ongoing investments in emissions-free energy projects.

“Despite the disruption to economies last year, the US saw record installations of both wind and solar,” Thomas added.

“This growth has continued into 2021 with Q! installations of 3.6 gigawatts of utility scale solar. This represents the largest quarterly volume of solar installed ever. While this rate of growth is impressive, the target of full decarbonisation of the electricity sector by 2035 set by the Biden administration will require even stronger growth.

“Bloomberg New Energy Finance believes that even the tripling of capacity of wind and solar that they expect in the US over the next 10 years will not be enough to meet this goal,” Thomas added.