Demand for equipment in Europe could increase the price of modules

The prices of photovoltaic modules should continue to rise across the world in the coming months, due to the consequences of conflict between Russia and Ukraine, started on February 24th.

While nations like United States and United Kingdom plan a moratorium on the consumption of Russian oil and gas, the countries of European Union remain fearful about the impacts that Russian sanctions could have on the immediate supply of these fuels.

Currently, Russia is the main supplier of natural gas to countries such as Germany and Italy, which have no short-term alternatives to replace it. The fear is that if there are supply restrictions, much of Europe will be at risk of shortages.

In 2021 alone, the European Union imported around 155 bcm (billion cubic meters) of gas through Russian pipelines. This is an amount that represents around 45% of Europe's gas imports last year.

Fernando Castro, country manager of JA Solar in Brazil, explains that the conflict in Ukraine and that a possible reduction in the supply of Russian oil and gas to Europe should cause the countries of the Old Continent to increase, in the coming months, exponentially, the participation of renewable energies in their energy matrices.

As a result, the demand and price of products, such as polysilicon – the main raw material used in the manufacture of solar panels – should rise due to greater demand in relation to supply, which will inevitably impact the final price of photovoltaic modules on the market. worldwide.

“In this scenario, due to unbalanced supply and demand, prices should rise. And, at this moment, we don’t know exactly when, how much and for how long this [increase in prices] will be valid”, said Castro.

“Demand will grow a lot for photovoltaic modules in 2022 and in the coming years. Probably, with demand exceeding the manufacturing capacity of the main players in the market”, he highlighted.

The thesis defended by Castro is the same as that of other manufacturers in the sector. William ShengCEO of Sunova, for example, explains that the value of photovoltaic modules will also rise due to “the large silicon players having announced the postponement of the capacity expansion plan from 2022 to the fourth quarter (which reduces production)”, he commented.

Modules in Brazil

According to a Wladimir Janousek, director of JCS Consulting and Services, with the current scenario presented, Brazil will also be affected by the increase in the price of modules and will need to compete in the market with other countries to guarantee the supply of equipment on the domestic market.

“Where Brazil loses a little more is in the longer chain (freight) and because it has not developed any vertical integration policy for any component. In other words, we are subject to all types of increases, whether in polysilicon, EVA, backsheet, cell, aluminum and so on”, he said.

According to Janousek, despite the uncertainties, everything suggests that countries will struggle to obtain products and allocate capacities in the coming months, which should cause concern for the national sector until the final stretch of the year.

“It is still a very uncertain scenario, but the issue of prices will be a concern until at least the second half of the second semester”, he highlighted.

“Prices should continue to rise in the coming weeks and should be maintained at a different level than what had been projected. The market had an expectation that prices could, in the first half of this year, fall again and be close to what we had in 2020. However, this should no longer happen for other reasons as well”, he highlights.

According to Janousek, global demand for equipment was already growing even before the conflict in Ukraine. On the other hand, he highlighted that the increase in capacity at the beginning of the chain is still being implemented in a slower process and that, perhaps, the full capacity of the new Chinese factories will only be reached in the second half of the year.

“In parallel, we see China with a very aggressive proposal for additional expansion in its solar generation matrix with a very different strategy for DG on rooftops and GC in desert regions, potentially reaching the 120 GW mark this year, which would be more than half of what was predicted for the entire world,” he said.

“This puts pressure on the production chain, because domestic demand in China is high and other markets will fight for products”, he highlighted.