Supply crunch casts shadow over Australian solar boom

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China’s unexpected 2017 boom in solar PV installation could have an unfortunate impact on the ambitious plans of many in Australia’s surging solar sector – a bottleneck in module supplies and price rises that could impact the huge pipeline of project.

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The unexpected boom in China’s solar PV installation this year may have an unfortunate impact on the ambitious plans of many in Australia’s surging solar sector – a bottleneck in module supplies and price rises by the end of the year.

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Source: Flickr

The supply crunch has been predicted by market analyst IHS, as part of its forecast for a record 90GW of solar PV to be installed across the world in 2017, with 45GW of this to be installed in China alone.

The size of China’s installations – nearly equivalent to the size of Australia’s entire grid capacity – has taken analysts by surprise, because it was generally assumed that the strong first half installation was due to the expiry of a generous geed-in tariff on July 1.

But the installation rates have continued unabated, with 11.3GW installed in July alone, and IHS says the China demand is consuming a large proportion of the global PV module supply, leading to increased prices and lead times that extend into 2018.

“The latest installation forecast implies that the PV module supply chain is at the very upper end of what it can produce within a year. In reality, the final number of module shipments for 2017 is likely to be limited by the supply of polysilicon.

“As a result of the tight supply, projects are being delayed” and as a result IHS Markit has cut its forecast for installations outside of China in 2017 by 7GW.

Australia, which is experiencing a boom in large-scale solar projects, and in rooftop solar, is also expected to be affected.

“This high China demand has a great impact on pricing and availability in markets sourcing modules from China, such as Australia,” says IHS analyst Josefin Berg.

“Many of the large PV projects secured modules earlier in the year, and may not be impacted. But we do expect some of the large projects that initially were planned for 2017 completion to be pushed into 2018.”

Solar farm developers and contractors confirmed to RenewEconomy that the supply crunch was starting to have an impact. “Absolutely, there is high demand for modules at the moment,” said one. “There is a global shortage, pricing has gone up the past 6 weeks,” said on wholesaler.

According to Reneweconomy’s data, there are more than 2,300MW of large-scale solar plants either under construction or about to build across Australia, and another 12GW of projects in the pipeline – although it seems clear that not all these will be built.

Most solar projects are effectively being built without subsidy, because the off-takers are generally taking the renewable energy certificates that will be generated by the plant.

Only those companies with deep enough pockets to fund the equity component are able to take the “merchant risk” and sell into the wholesale market and benefit from the current high price of LGCs. However, few of these plants are actually under construction.

The competitive nature of the contract market is being exacerbated by the fact that the big retailers are close to filling their legislated mandates, and the corporate PPA market is only just emerging. This is keeping margins fine, and a rise in module prices – even as little as 10 per cent – could have an impact on returns and pricing.

Global module pricing is also being affected by the Suniva trade case in the US, where a tariff on Chinese module imports is being considered.

Solar module prices have rebounded to the mid US40c/watt, a 25 to 30 per cent increase over prices just a few months earlier, which Deutsche Bank says is driven also by stronger global demand, lack of supply chain inventory and supply shut-downs at some Chinese companies that are transitioning standard lines into higher efficiency lines.

“Although China demand is likely to slow down in (the second half), demand is not falling off a cliff and the recently introduced China target suggests that China demand would remain relatively stable in 2018 timeframe while demand in rest of the world continues to grow,” it said in an analysis two weeks ago.

“Across the supply chain, poly, wafer and Taiwanese cell prices have also started increasing over the past few months, reflecting the overall tightness in solar supply chain.”

As an example of how price variations can affect project pipelines, Deutsche says that a tariff of 10c/watt could impact 80 per cent of the pipeline of large-scale solar projects in the US.

In Australia, however, that impact may not be so great because solar is competing against soaring wholesale prices and huge retail prices, meaning that the savings for business consumers in particular remain substantial, once management turns their mind to it.

In recent months, Australian major energy users, like Sun Metals, Telstra, the Whyalla steel plant, Nectar Farms, and numerous smaller businesses are also investing heavily in wind and solar and storage, some up to the level of 100 per cent.

Four of the world’s biggest companies – Apple, Amazon, Google and Facebook, have vowed to source all their electricity needs from renewable energy within a few years, and they have also been joined by the likes of IKEA and brewing giant In-Bev, the owner of Foster’s.

Apple and Foster’s have yet to announce their plans to make their Australian operations 100 per cent renewables, but PPAs for solar plants are expected to feature high in their strategy.

In an earlier report, Deutsche Bank said that the global average unsubsidised levelized cost of delivered solar would be cheaper than coal in more than 50 markets by 2022.

This would represent 5,000GW of available market potential, underlining a point made earlier this week by UNSW solar pioneer Martin Green, who expects prices to fall to $US10/MWh in some parts of the world, with prices in the mid $US20/MWh to be standard elsewhere, pushing the world towards annual installation targets of 1,000GW by the mid 202s, compared to just under 100GW now.

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17 Comments
  1. Radbug 1 year ago

    China’s going VERY big into robotics. The problem for China is that you can’t arbitrage wage rates for robots, they get paid very, very little! This implies that any country can establish a robotic PV factory and be as competitive as China.

  2. George Darroch 1 year ago

    There’s always too much, or not enough.

    Some parts of the domestic solar industry are almost as bad as the farmers…

  3. Mark Roest 1 year ago

    There are some other ways to make solar, too. Suppose you could set up a solar plant for under a million dollars that can make panels between 25 cents and 40 cents a Watt? Suppose it might do 35% or more efficiency? Suppose it might also be potentially building-integrated? You could justify putting one of these up in every city in Australia!
    There is a company that has such technology, but first needs to do the final steps of development of a safe, powerful battery that can solve the problems of intermittency in renewable energy production, and range and cost in vehicles. Supporting the battery to get to the point of being ready to order construction of a 1GWh-annual capacity pilot factory, probably less than one year from now, could give you a chance to help make the solar happen too. Couple ample support with some gifted people to carry the load in parallel under the inventor’s guidance and supervision, and perhaps both could be commercialized at the same time.
    Interested?

    • Jeremy C 1 year ago

      Why does he need to develop a battery to go with it, just partner a with an existing supplier.

      • Mark Roest 1 year ago

        The battery makes the battery electric vehicle and renewable energy revolution enter the tornado of demand (Chasm Theory of Marketing) and take off. According to a paper a few years ago from NREL, 6 hours of storage add 3 cents to the value of every kWh produced by a utility scale solar system, regardless of whether it all goes through the battery or not.
        Also, he built a hybrid car with 14 lead acid racing batteries and had a vision of a family in it being soaked in sulfuric acid as they were hit by a cement mixer and rolled, after a cement mixer in his town broke loose, rolled down a hill, and plowed through 6 parked cars.
        He could not morally accept that, so he surveyed all the battery technologies, and chose saline based electrolyte (like ancient and 2-century-old batteries), and ceramic semiconductor electrodes, as inherently safe, and took on the challenge of developing it into a high-performance battery. Everyone else is either doing lithium or low energy density flow batteries, etc. It is what the world most needs right now.
        And there is no existing supplier.

        • Caffined 1 year ago

          Wow ! Lead Acid “racing” batteries…how fast can they go ?
          Your friend must have missed a few cell options in his search,
          ( and why did he even consider lead to start with ?)
          there are other choices that are more suitable for vehicles than saline based.
          No matter what battery is used, its the energy in the battery that is the real danger.

          • Mark Roest 1 year ago

            1. Lead acid racing batteries were 2x normal lead acid performance.
            2. The danger of the lead acid battery was the trigger for the search which came afterward, and options were not missed.
            3. The objective was to prove that a hybrid could work, and he got 140 mpg equivalent. The lead acid battery was simply what everyone used, until the accident in his town led to the awareness of its dangers.
            4. There is electrical danger in any powerful battery, but it can be countered by design. There is toxicity and explosion danger in both lead acid and lithium batteries.

          • Caffined 1 year ago

            Lead acid batteries have not been used for EVs , even by the the low budget DIY types, for many years.
            Most changed to Lithium Phosphate (much lighter, more energy dense, longer life , leakproof,), 8-10 yrs ago, and many have since upgraded to Lithium cobalt/manganese/Aluminium..as used by all serious commercial EV manufacturers.
            A Saline battery is certainly safe in terms of chemical risk, but its heavier even than lead acid, very low energy density, even lower power density, and poor round trip efficiency, and low cycle life.
            Currently, cost is also highly uncompetitive.
            All of which make them totally unsuitable for any mobile use, other than possibly a large ship !
            So you friend has a lot of development to do, and considering all the money and expertise that has been devoted already to this technology by some of the best funded and smartest in the business, ……i wish him well
            As to other technologies he overlooked, what about NiMh, (as used by Toyota and Lexus in Hybrids) or even older NiCad..neither of which will leak if upended.

          • Mark Roest 1 year ago

            You are a touch arrogant here. The conversion was of a Saturn; do you even remember them? It was long before the advances that you refer to. The design of the battery started over 25 years ago. Saline batteries have a theoretical potential almost as great as lithium (before derating it to prevent explosions) — over 3.5 kilowatt-hours per kilogram. Compare that with the Kia Soul at 200 Watt-hours per kilo, or the Tesla at 167 Wh/kg. The issue you speak of is an artifact of a lack of progress in the field. Aquion Energy declared Chapter 11 bankruptcy in March. I expected them to fail because a year ago they were reported to be at about 23 Watt-hours per kilogram. I notice they say they will be the lowest price, but they don’t say what that will be. Tesla and LG Chem both plan to be under $100/kWh cost by 2020. Unless the head of General Motors gloats publicly again, the pricing won’t be public.
            We anticipate over 500 Wh/kg; that’s over twice as light as a lithium battery. I think you are truly living in the past.

          • Caffined 1 year ago

            There are many cell proposals with impressive claims of high energy density, high discharge, long life, low cost, etc etc.. but none seem to get out of the labs and
            into commercial use.
            Theoretical potential, is just that ..theoretical… and of little use until it is commercially available, in quantity
            Theory and potential are encouraging factors, but until there is something that can at least be demonstrated, i wont hold my breath.
            As you know Aquion are still in business and one of the very few Saline battery producers with a real product to sell..
            If you realy think you can produce a Saline cell with superior performance to the current level of lithium, then i wish you well…I for one would welcome it, but 500Wh/kg from a chemistry that by your words is currently at 23 Wh/kg is a huge stretch of the imagination.

    • Gnällgubben 1 year ago

      I don’t believe that for a second. Sounds like a scam to me.

      • Mark Roest 1 year ago

        As I said, the battery comes first.

    • RobS 1 year ago

      If you can make whole panels for 40c/watt with 35% efficiency then there is absolutely no reason to wait for some possible future battery technology before bringing them to market. The majority of domestic installation are still PV without batteries, if the panels you describe are possible now then bring them to market and let the batteries follow behind. In fact there is one reason to wait, if the pa Els are vapor ware in search of green energy grants.

      • Mark Roest 1 year ago

        We already have battery design, and we assign a higher priority to it.

  4. hydrophilia 1 year ago

    Hmm…. so the idiots in the USA may crush their demand just as supplies start to get tight worldwide? Sounds like it might be good for the rest of the world.

  5. Brunel 1 year ago

    This is why Mr Lyndon Rive built a solar panel factory in Buffalo, NY.

    Capacity crunch.

    • neroden 1 year ago

      If there’s a silicon shortage, even that won’t help. Have to build more silicon refineries.

Comments are closed.