China’s solar giants forced to cut prices as coronavirus curbs demand
- This is bad news for the companies that make solar components and could lead to consolidation among some of the smaller players in the industry
- Chinese manufacturers comprise at least 73 per cent of the global capacity in every step in the global solar power supply chain
Chinese manufacturers that dominate nearly every step in the global solar power supply chain are being forced to slash prices as the coronavirus disrupts projects around the world.
Costs for components like wafers and cells have fallen by as much as 20 per cent since the start of the year. These are likely not to have bottomed out yet, as the outlook for demand remains uncertain and new mega-factories threatens to add supply.
This is bad news for the companies that make solar components and could lead to consolidation among some of the smaller players in the industry. The bargain-basement prices, though, could also spur demand for a solar boom when the global economy recovers.
The coronavirus pandemic has disrupted new solar projects around the world, as government efforts to slow the spread of the disease have kept workers away from installation sites. The economic collapse has threatened funding for new projects. New global capacity added this year is now forecast to be 19 per cent less than before the epidemic broke out, according to BloombergNEF.
The supply chain that creates those solar power plants is almost entirely housed within China. From producing polysilicon ingots, cutting them into wafers, forming those into cells to combine into panels, Chinese factories comprise at least 73 per cent of global capacity in every step, according to BloombergNEF data.
With installations slowing, solar giants LONGi Green Energy Technology Co and Tongwei Co have had to cut product prices several times in the past two months to maintain market share. Wafers and cells have become at least 20 per cent cheaper this year, while panel prices eased 10 per cent, BNEF data showed.