Facing increasing costs for raw materials, consumables, and shipping along with slowing demand, tariffs, and bans in the US on materials from Xinjiang, cell-and-module manufacturers are adjusting capacity plans and indicating that higher prices are here to say.

Meanwhile, the rapid spread of the Delta variant in the Southeast Asia countries of Thailand, Malaysia, and Vietnam is leading to new hiccups along the photovoltaic supply chain, with manufacturers such as Singapore-based Maxeon forced to shut down operations.

Impact on Developers and Installers

As 92% of cell manufacturing capacity is in China (74%) and Southeast Asia (18%), buyers in countries outside of these regions are shouldering the burden of higher prices. Many are pulling back or delaying deployment, hoping the price increases are short-term. In most countries, winning tenders are too low to support a profitable installation under current pricing conditions.

The US faces a different challenge. The WRO is stranding cells and modules at US ports. Moreover, considering China’s June 10 law that made participation with the US on forced labor a crime, US developers and installers will face short-term supply constraints and higher prices over the long term.

Concerning Xinjiang should the EU, Japan, India, and other countries take a stepped-back approach to forced labor in Xinjiang and leave action to industry participants, participants in related countries will likely see price relief – though not much.

Prices will stay high until manufacturers see costs decrease and potentially even longer. Manufacturers are seeing higher margins currently even with cost increases and may not be willing to go back to the days of low to negative margins.