A new report from the International Energy Agency highlights the importance of geographically diversifying the global PV supply chain. This would prevent the vulnerability of the supply chain to bankruptcies and underinvestment.
The International Energy Agency (IEA) has revealed that more than 30% of integrated companies operating in the solar module manufacturing sector worldwide are at medium or high risk of bankruptcy.
In the Special report on Global Solar PV Supply Chainsthe agency pointed out that only 15% of these builders are at high risk of bankruptcy and that in 2018 their share was around 28%. As for polysilicon suppliers, about 11% of them are currently exposed to a high risk of bankruptcy, while an additional 49% are estimated to have a medium risk. “Due to the high prices of polysilicon, the risk of bankruptcy of polysilicon companies dropped significantly in 2021,” the report said. “A return to low polysilicon prices, however, could reverse this change.
According to IEA experts, the support that the Chinese the government grants polysilicon manufacturers in the form of financing and subsidies makes this market segment particularly financially vulnerable. “For example, the largest polysilicon The company recorded net losses between 2018 and 2020 despite government support,” they state without naming the producer. “From a security of supply perspective, persistently poor financial performance within and across the solar PV value chain increases the vulnerability of the supply chain to bankruptcies and underinvestment, which can reduce its resilience, increase prices and limit the deployment of photovoltaics.”
The agency warned of possible changes in subsidy regulations for the photovoltaic industry in China, saying these could lead to an increase bankruptcy risk, even for the most competitive manufacturers. “In the event of the bankruptcy of competing companies, this could lead to greater price increases and supply impacts, in addition to the loss of the grant,” the report said.
The document also describes in detail the main vulnerabilities of the global PV supply chain while highlighting the need for wide geographical diversification of the industry. “China has been instrumental in reducing global solar PV costs, with several benefits for clean energy transitions,” IEA analysts point out. “At the same time, the geographical level concentration in overall supply Chains too creates potential challenges this governments need to take care of.
According to their estimates, the the world will depend almost entirely on China to solar panel production through 2025. “Based on manufacturing capacity under construction, China’s share of global polysilicon, ingot and wafer production will soon reach nearly 95%,” they note. China’s Xinjiang province currently accounts for 40% of global polysilicon manufacturing, the report points out. “This level of concentration in any global supply chain would represent a significant vulnerability; solar PV is no exception.
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