Photovoltaics may die out in the United States in the coming years. Trade tensions between China and the United States, the risk of a collapse in energy prices and an oversupply of solar panels could lead to a sharp slowdown in this industry, according to a study prepared by S&G Global Market Intelligence.
Photovoltaic developers have already suffered the consequences of rising inflation and rising interest rates, reducing the margins of their projects. Since last August 1, China has restricted the export of gallium and germanium, used to make photovoltaic panels, in an attempt to protect its production in the medium term and respond to measures adopted by the US and Europe to the strengthening of its industry will be treated.
The White House is trying to prevent foreign dependence for the development of renewables with measures such as the Inflation Reduction Act (IRA) and the European Union is trying the same with the Net Zero Industry Act.
So far, more than $70 billion in new investments have been announced for clean energy production in the US since it was implemented in August 2022. This boom means that solar module production capacity will exceed demand by 2025, according to S&P Global Commodity Insights.
In Europe, the pace of investment has been very slow and, in fact, the sharp drop in prices of photovoltaic panels has put projects at risk and led the sector’s own association, Solarpower Europe, to demand help Commission.
Another challenge that the sector will face is the possible increase in the price of wholesale electricity if new renewable supplies flood the market. Solar and wind can bid very low rates for low variable costs or even accept deficit rates to receive production tax credits.
“Renewables are disrupting the very market on which they largely depend,” S&P notes. “Revenues from competitive markets will decline as prices fall.”
Meanwhile, in Europe, developers can benefit from this oversupply of solar panels, after increased imports from China exceeded demand this summer and caused a sharp drop in prices. which continues to fall to historic lows.