Global prices for solar panels have climbed 16% this year, largely because costs for polysilicon and silver have increased, Rystad said Friday. That’s been exacerbated by pandemic-related restrictions that have sent some key raw materials costs soaring.
The higher prices are likely to limit demand growth for the next few years and may keep suppliers from increasing production capacity. The industry can make about 330 gigawatts of panels a year, but that would need to surge to at least 1,200 gigawatts by 2035 to keep the world on track to hold global warming at no more than 1.5 degrees Celsius (2.7 degrees Fahrenheit). But with factory utilization rates sliding to 58% last year in part because of the global slowdown, manufacturers have little incentive to build new plants.
“The solar industry must increase capacity and continue to fight cost escalation to meet climate change goals,” Rystad said in the report. “This will be a challenging task, however, as manufacturers now see their utilization plummet due to rising costs and Covid-19 — a turn of events that could discourage the investments needed to expand capacity.”