How Will The Price Increase Of Photovoltaic Modules Affect Photovoltaic Projects?

The current global photovoltaic industry supply chain disruption is making many solar projects in major markets postponed or unable to operate. The latest report from the Norwegian business intelligence company Rystad Energy indicates that rising component and transportation costs may cause 56% of the global planned solar power generation capacity next year to be delayed or cancelled.

South Korea seems to be no exception, although it has a strong domestic solar panel industry to rely on, and the industry has recently increased its efforts to increase production capacity.

Kyungrak Kwon, Director of Renewable Energy Projects of Solutions for Our Climate, a non-governmental organization in Seoul, South Korea, told Photovoltaics: “Currently, there is no official index of solar panel prices in Korea. However, we learned through industry interviews. In the past six months, the price of solar panels has risen from 10% to 15%, that is, from 340 won per watt to 400 won (US$0.289-0.339)."

He also revealed that this price increase will particularly affect small and medium-sized solar projects that have joined the Korean Renewable Energy Certificate (REC) program in the past six months. He further explained: “If the developer participates in the solar power bidding market organized by the Korea Energy Agency, the installation must be completed within six months. If the price of the module rises within this period, a loss will occur because the price has been confirmed. "

In the latest bidding activity under the REC plan, the agency allocated 2GW of photovoltaic power generation at a final average price of 136.128 won (US$0.115) per kilowatt hour. Kwon added: “It’s hard to know how many projects in South Korea stopped due to supply chain disruptions. However, South Korea currently supplies about 1-1.2GW of solar power generation every quarter, 80% of which are [power generation] less than 1 MW. We expect this type of project will be the most affected."

He also explained that Korean manufacturers currently expect the supply chain disruption to last at least until the second quarter of next year. He believes that if China's current shortage of electricity and raw materials is not resolved, component prices may remain high within two years.

When asked whether the South Korean photovoltaic industry has the ability to break the supply bottleneck by increasing production capacity, Kwon said that Hanwha Solutions, South Korea’s largest solar company, announced on a recent conference call that taking into account production cuts in the second half of this year Circumstances, the company reduced its internal component sales target from 9 GW to 8 GW, although its total production capacity could reach 10 GW. Kwon emphasized: "This can be understood as reflecting the recent increase in raw material prices. As early as two months ago, Hanwha Solutions announced plans to invest 1 trillion won ($849 million) in the Jinchoen plant by 2025 for expansion. But I don’t think this is a strategy to deal with the recent supply bottlenecks."

As of the end of December 2020, the installed capacity of solar power generation in South Korea is approximately 15.6GW. The newly added photovoltaic installed capacity in 2020 will be about 4.1 GW.

Currently, South Korea plans to install 30.8 GW of solar energy by 2030.