{"id":1175,"date":"2022-04-29T04:24:22","date_gmt":"2022-04-29T04:24:22","guid":{"rendered":"https:\/\/colitetech.com\/?p=1175"},"modified":"2024-04-16T12:35:13","modified_gmt":"2024-04-16T12:35:13","slug":"why-is-the-cost-of-solar-increasing","status":"publish","type":"post","link":"https:\/\/colitetech.com\/blog\/why-is-the-cost-of-solar-increasing\/","title":{"rendered":"Why is the Cost of Solar Increasing?"},"content":{"rendered":"
[et_pb_section fb_built=”1″ _builder_version=”4.17.4″ _module_preset=”default” global_colors_info=”{}”][et_pb_row _builder_version=”4.17.4″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.17.4″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.17.4″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n
[\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.17.4″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.17.4″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.17.4″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n
For the first time in well over a decade the price of a solar system in the US is increasing. One of the key drivers is the cost of PV panels, which according to Rystad Energy research and analysis, has increased by over 50%<\/a> since the second quarter of 2020. Rystad further predicts this cost could increase another 10-15% in 2022. In this breakdown, you can see that the cost of polysilicon has surged just in 2021 and there is visibly noticeable growth in shipping costs from 2020, which pushes the total cost of a PV module higher.<\/p>\n [\/et_pb_text][et_pb_image src=”https:\/\/colitetech.com\/wp-content\/uploads\/2022\/07\/PV-Module-Cost-Split_PFI.jpg” alt=”Graph showing the cost split of a PV module” title_text=”PV Module Cost Split_PFI” url=”https:\/\/www.pfie.com\/story\/3154736\/solar-growth-faces-headwinds-zvy9pzcj45″ url_new_window=”on” _builder_version=”4.17.4″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_image][et_pb_text _builder_version=”4.17.4″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n PV Module Costs Split 2018 to 2022<\/em><\/p>\n [\/et_pb_text][et_pb_text _builder_version=”4.17.4″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n There are several seemingly unrelated factors that have converged over the last several years to drive this trend including:<\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row column_structure=”1_2,1_2″ _builder_version=”4.17.4″ _module_preset=”default” custom_margin=”||0px||false|false” custom_padding=”||0px||false|false” global_colors_info=”{}”][et_pb_column type=”1_2″ _builder_version=”4.17.4″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.17.4″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n A first step in unpacking these issues is understanding where the bulk of PV materials and components originate throughout the world. Currently, the countries mentioned above represent well over 80% of the global supply of PV panels. Consequently, any additional import duties, penalties, or restrictions of components and panels from these regions have a direct impact on the end price of complete systems in the US. There is a concerted ongoing effort on the part of the US Administration to facilitate expanded US supply, including manufacturing tax incentives, but that will take time to evolve, and in the end may not have a material impact on reducing the overall cost of solar.<\/p>\n Friction related to the global solar panel market had been building for years and in February 2018, the United States International Trade Commission (ITC) levied a 30% tariff on solar cells and module imports from China (known as Section 201 tariffs<\/a>). The ITC had earlier concluded that China was subsidizing its solar equipment manufacturers and enabling them to \u201cdump\u201d solar panels on the international market at prices below the cost of production. The tariff was scheduled to decrease 5% annually to 15% in 2021, and then expire in early 2022.<\/p>\n <\/p>\n [\/et_pb_text][\/et_pb_column][et_pb_column type=”1_2″ _builder_version=”4.17.4″ _module_preset=”default” global_colors_info=”{}”][et_pb_image src=”https:\/\/colitetech.com\/wp-content\/uploads\/2022\/07\/Distribution-of-Solar-PV-Module-Production-Worldwide-in-2020-by-Country_statista.png” alt=”Graph showing the worldwide distribution of solar PV module production by country in 2020″ title_text=”Distribution of Solar PV Module Production Worldwide in 2020 by Country_statista” url=”https:\/\/www.statista.com\/statistics\/668749\/regional-distribution-of-solar-pv-module-manufacturing\/” url_new_window=”on” _builder_version=”4.17.4″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_image][et_pb_text _builder_version=”4.17.4″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n Distribution of solar photovoltaic module production worldwide in 2020, by country<\/em><\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.17.4″ _module_preset=”default” custom_margin=”0px||||false|false” custom_padding=”0px||||false|false” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.17.4″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.17.4″ _module_preset=”default” custom_margin=”0px||||false|false” custom_padding=”0px||||false|false” global_colors_info=”{}”]<\/p>\n In October 2020, however, the Trump administration increased the tariff from 15% to 18% for its fourth year and directed the ITC to consider extending the tariffs beyond their scheduled expiry. In November 2021, the\u202fITC\u202frecommended that the Biden administration extend the tariffs and the extensions were approved in February of this year. According to the Solar Energy Industry Association (SEIA), these tariffs are causing a 43% to 57% price increase for solar panels in the US market<\/a> compared to the global average.<\/p>\n In August 2021, further complicating an already challenging US PV panel market, an anonymous group of US-based solar manufacturers filed a petition\u202fwith the Department of Commerce to expand the Section 201 tariffs to Chinese companies moving production of solar cells to Malaysia, Thailand, and Vietnam. The petition was rejected based on the uncertainty around the standing of the anonymous group that brought the petition. It was followed up in February 2022 when California based Auxin Solar filed a similar petition with the Department of Commerce requesting an investigation into crystalline silicon photovoltaic (CSPV) cells and modules assembled in Malaysia, Thailand, Vietnam, and Cambodia using parts and components from China. Both petitions argued that Chinese manufacturers shifted production of CSPV cells and modules to affiliated companies in these countries to circumvent US regulations and duties. The DOC initiated the investigation on March 25th, and while the full market impacts may not be known for some time, cancelled or delayed PV module supply as a result of this petition could hinder many planned projects.<\/p>\n\n