The world is drowning in solar panels. The International Energy Agency (IEA) predicts that 1,100 GW of capacity will be installed by the end of 2024, corresponding to three times estimated demand. According to the agency, it is Chinese overproduction that is driving the trend.
And the panels have become so cheap that they are used as garden fences in the Netherlands and Great Britain, writes the Financial Times.
– This is the result of solar panels becoming so cheap that we just put them up everywhere. Since labor and scaffolding make up the lion’s share of the installation cost of a roof-mounted PV system (the system that converts light into electricity – photovoltaics), it might make sense, says solar analyst Jenny Chase at BloombergNEF.
The power grid is the bottleneck
Higher labor costs have made installation more expensive, while the waiting time for panels to be connected to the power grids is a test of patience for both industry and households. Capacity problems in the power grid affect most countries, the newspaper points out, adding that this is not a “quick-fix.”
ONE OF THE WORLD’S BIGGEST: Chinese Longi Green Energy Technology. Photo: Bloomberg
As a result, solar panel manufacturers struggle with profitability, and redundancies, bankruptcies and closures characterize the sector. In February, the European Solar Manufacturing Council warned that European players will soon have to close if the crisis aid is not forthcoming – a warning that came after REC Solar shut down the production of silicon in Kristiansand last November.
Swiss Meyer Burger Technology has announced the closure of a solar panel factory in Germany – one of Europe’s largest. In France, Systovi is hunting for new owners, while (EDF-owned) Photowatt has informed the Financial Times that the company is struggling to make ends meet.
Unprofitable, even in the US
In China, Longi Green Energy Technology, one of the world’s largest manufacturers, recently fired several thousand employees.
Even in the US, where manufacturers of components for the solar industry are subsidized by the Inflation Reduction Act (IRA), profitability is weak. The country is a major importer of solar panels from Southeast Asia, and these are sold at a discount compared to US-made ones – even when customs duties are included.
The newspaper also points out that Treasury Secretary Janet Yellen, when she visited a solar energy producer in Georgia last week, warned the Chinese against dumping green energy.
Never been cheaper
At the end of March, a solar panel cost 11 cents per watts, “all-time low” and, according to BloombergNEF, a halving from the same time last year. According to the Financial Times, the price drop is expected to continue.
– Below a “red line” of 15 cents, it will not be possible for us to invest seriously in European production. You’re not going to do it with a crazy, small margin that won’t pay for anything, says Alessandro Barin – head of Italian FuturaSun which produces panels in China for sale in Europe.
