PV panel prices have shot up by 30% over just one week on October 21 and with about 25% more expected before Christmas.

This could mean up to tens of thousands of dollars additional cost to your project.

You might think I’m joking, and I couldn’t believe it myself…until I spoke to a number of suppliers.
We know there has been a global supply and freight disruption causing a steady price increase of about 1 cent/ Watt per month in the last 3 months or so.

But why this recent massive increase?

It is due to China’s coal shortages, the Northern hemisphere’s winter power demand and carbon emission reduction targets. 
This has led to energy rationing that forced many major PV manufacturers to significantly reduce their outputs.
Some suppliers are not even receiving any more shipments this year.

What does it mean to solar customers?

If you are in the process of installing solar, then a few issues that may come up are laid out below - in fact, I’m not surprised if one of them has already hit you:

1.       Contract variation

Solar retailers who haven’t allocated stocks to your project won’t be able to absorb this increase and hence will most likely pass it on. 
Or, they might delay the installation date hoping that the issue will resolve soon.  Nobody knows how long this will last. But, our sources suggested that volatility could go on for 12-18 months. Some solar operators who profess to have stocks now, may still not provide the easy answer if your installation is still a few weeks away. 
Some may deploy these stocks for other projects if it’s more profitable to do so.

Price increases mean worse payback and/or return. The delay means solar savings are foregone every day - as you are aware, solar energy is much cheaper than grid electricity.

2.      Contract cancellation

Solar retailers may cancel the contracts deeming this a force majeure event because they cannot afford to sell the project anymore. Well, you can just ask many other solar companies to quote, right? Not quite, because probably 95% of solar companies are affected by this and have raised their prices.

3.       Change in the project financials

If your business is very sensitive about the payback or ROI, then it’d be good to be aware of the adjusted numbers. It’d make sense to contact an independent engineer to do this for you.

 
4.       Solar companies going out of business

As you know, many solar companies have come and gone. Some even struggled more during
COVID and lockdowns. The price volatility would/ could expose the cowboys and unreasonable risk-takers who are selling at very low margins. How would you manage the risk of an unfinished project or unsupported solar system if the installer is going out of business?

What are the solutions?

a.       Find unallocated stocks secured at the old pricing - Our team have been working through our network to access remaining stocks that have not been allocated. This means contract certainty.
b.       Select trusted solar professionals who do what they say, instead of just meeting their legal obligations
c.       Get an independent expert who monitors the market on a daily basis to help you manage these risks
d.       Use the currently high-valued VEU certificates to offset the price increase
If you would like more info, then just contact us by clicking here 'Ask A Question'