A new report by SolarZoom highlights the demand-supply gap in the Chinese solar module market due to the ongoing shortage of solar glass used in the manufacturing of solar modules.
The solar PV module demand in China is likely to exceed 18 GW in the last quarter (Q4) of the current year. In contrast, the module supply capacity will only be around 14 GW, creating a shortage, according to the report. The report cites the main factor affecting the supply chain in the short-term to be the shortage of solar glass used in modules.
According to SolarZoom, at least 13.67 GW of large-scale solar projects have recently opened bids, and they plan to achieve grid-connectivity by the end of this year.
The total capacity of ground-mounted solar power projects in Q4 would be above 14.5 GW. Along with this, the demand for household rooftop solar projects will be nearly 2.6 GW for the quarter, and the commercial and industrial (C&I) segment will account for almost 1 GW, taking the total above 18 GW. The fourth quarter’s module supply capacity is expected to be only 14 GW, which marks a nearly 4 GW shortage.
The report noted that currently, the production capacities of silicon wafers, solar cells, and modules exceed 200 GW. This year a wide variety of module sizes have been in use, which has led to a growing demand for solar glasses of varying sizes. To meet the demand for large silicon wafers and large-sized components, some glass companies are focusing on the technological upgrades of the existing production lines, resulting in a short-term decline in production capacity.
However, one of the top executives from a leading module supplier that Mercom talked to said, “Right now, solar glass is not available, and this has affected the supply chain. The prices have gone up, and companies down the line have been affected the most. It is not because of technology upgradation. It is mainly due to the pre-booking done by all the top manufacturers. They have increased their capacity and pre-booked all the components. The prices of solar modules will not come down in Q1 next year as well because of the shortage of solar glass,” he said.
As per the report, in the first half of the current year, the proportion of overseas demand increased significantly. Several companies have switched from 3.2 mm single-sided module glass to 2 mm double-sided ones. This has led to a shortage of single-sided glass structures. Another reason that has made things more complicated is that the winter air pollution prevention and control work has led many companies to stop working, affecting the solar glass supply in a big way.
According to PVInfolink’s research, the current price of 3.2 mm coated glass in the market has reached 41 yuan (~$6.1)- 45 yuan (~$6.7) per square meter.
The report further noted that solar glass’s current supply capacity in the market could guarantee 14 GW of module demand.
The report added that there will still be a gap between the supply and demand in the fourth quarter, leading to many projects being not connected to the grid by the end of this year.
The report pointed out that every time the investment increases by 0.05 yuan (~$0.007)/W, the rate of return drops by about 0.2%, and if the rise is 0.02 yuan (~$0.003)/W, the total investment rate of return drops by about 0.8%.
Currently, many of the new projects have a subsidy of less than 0.02 yuan (~$0.003)/kWh, and for such low subsidy projects, it is uneconomical to get connected to the grid by the end of this year.
The report added that many companies have decided to drop certain projects because of the shortage of glass components.
However, the silver lining is that the component prices are expected to come down next year, and normalcy would prevail eventually, according to the report.
Meanwhile, the European Union recently announced countervailing duty on solar glass imports from China would continue. Countervailing duties are anti-subsidy duties levied on imports to balance out the negative effects of subsidies.
China’s National Energy Administration recently published the latest residential rooftop solar installations’ figures. The country added 1.3 GW of residential rooftop solar capacity in September 2020. The latest numbers took the total capacity installed in the first nine months of the year to 5.27 GW.
Earlier, Mercom had reported that China installed 11.52 GW of solar capacity during the first half of 2020. Large-scale solar installations accounted for 7.08 GW and distributed solar accounted for 4.43 GW at the end of June. Installations increased slightly compared to the first half of 2019 when China installed 11.4 GW.
Rakesh is a staff reporter at Mercom India. Prior to joining Mercom, he worked in many roles as a business correspondent, assistant editor, senior content writer, and sub-editor with bcfocus.com, CIOReview/Silicon India, Verbinden Communication, and Bangalore Bias. Rakesh holds a Bachelor’s degree in English from Indira Gandhi National Open University (IGNOU). More articles from Rakesh Ranjan.