As Chinese Solar Firms Raise Silicon Wafer Prices, Will Transmission Happen To Cells and Modules?

As Chinese Solar Firms Raise Silicon Wafer Prices, Will Transmission Happen To Cells and Modules?

With the recent increase in silicon wafer prices by certain Chinese solar companies including Longi, the firms hope that this will also impact the cost of solar cells exported from China to other countries. Given China’s dominant position in solar cell exports, higher wafer prices could influence global solar module costs in destination markets. Prices, which have been on a downswing almost through 2024, are considered at unsustainable levels by most manufacturers.  Chinese firms, already dominant across the solar supply chain, are particularly dominant in the wafers space, accounting for over 90% of global supplies and production.

Longi Green Energy Technology and TCL Zhonghuan Renewable Energy Technology, two leading Chinese firms involved in silicon wafer production, made the move to raise their prices. Since silicon wafers are essential for solar cell production, this move may lead to higher prices for imported solar cells in countries like India, a major importer of Chinese solar cells, in the near future.

As Chinse Solar Firms Raise Silicon Wafer Prices, Could India Pay More? Source: SBI CAPS Report

Chinese solar cell and module manufacturers have faced revenue losses recently due to low prices. Although these lower prices allowed Chinese firms to offer solar cells and modules at competitive rates, the anticipated increase in prices may pose new challenges for Indian solar module manufacturers, who rely heavily on these imports.

Several solar companies in China like Jinko Solar for example saw a rise in their losses due to operational issues. It attributed the loss from operations due to the surge in operating expenses and lesser revenues.
It claimed that the sustained low prices forced many solar manufacturers to either cut down their productions or in many cases cancel any further expansion plans. Current capacity in China has crossed 1200 GW, at a time global consumption is expected to nudge 525 GW at best in 2024.

With a lower 25% Basic Customs Duty (BCD) on imported solar cells versus 40% on modules, the availability of affordable imports has significantly boosted India’s domestic module manufacturing capacity. According to the latest Approved List of Models and Manufacturers (ALMM), India’s solar module manufacturing capacity now exceeds 54 GW. However, the country’s total cell making capacity is considerably less at under 8GW currently, with zero wafer making capacity.

Companies with the highest enlisted local domestic manufacturing capacity.

Industry experts foresee a potential end to the period of ultra-low prices for imported solar cells and modules by mid 2025, and have been preparing to address the challenges of rising prices for solar cells, silicon wafers, and other components. These efforts aim to strengthen domestic module manufacturing capacity.

Slowly, with the hand holding support of the government and schemes like Production Linked Incentives (PLI), the domestic manufacturing and backward linkage comprising solar cells, wafers and ingots are likely to see the light of the day soon in the country. Several companies like Reliance, Adani, Grew and others have jumped onto the bandwagon to create local capacities of the key items required for the production of solar modules. However, the country needs to wait more for a robust backward integration. Currently, a selected companies like Jupiter, Premier Energies, Websol and others are into the production of solar cells.