The report of energy research company Rystad Energy pointed out that the cost of solar power has been surging due to the incessant inflation of raw material prices and the constrained background of the supply chain, where more than 50% of solar farms for public utilities around the world may be postponed or canceled in 2022.
Rystad Energy commented that the cost of solar components has risen by nearly 50% from US$0.20/Wp in 2020 to US$0.26-0.28/Wp in the second half of 2021. The primary factor comes from the excessive increment in the prices of multi polysilicon, which according to the survey of Rystad Energy, has ascended by 300% since July 2020. Another analytical company IHS Market is projecting a lower level of increase, though the degree remains over 200% since October 2020.
The cost of other raw materials, such as silver, copper, aluminum, and glass, has also ascended aside from multi polysilicon. As the world gradually extricates from the overcast of the COVID-19 pandemic, the climbing demand actuated by economic recovery is bound to lead to an inflation under a constrained status from the supply chain. Of course, the obstinately high shipping prices are also affecting solar power plants by having increased by 500% since September 2019. The cost of modules and transportation usually occupies the largest ratio in the cost of solar power plants at roughly 1/4 to 1/3 of the total expenditure.
Rystad Energy pointed out that the levelized cost of electricity has increased by 10-15% due to the surge in transportation cost, and thus projects that 50GW (approx. 56%) of over 90GW solar power plants for public utilities around the world are in risk next year.
These challenges are seemingly unresolvable within a year, where developers and power purchasers will be facing a lowered threshold of profitability, or a postponement in the progress of the solar farms. David Dixon, senior analyst in renewable energy at Rystad Energy, commented that the solar public utility industry still needs to resolve many severe challenges prior to the debut of COP26.
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