What You Absolutely Need To Know About The Solar Supply Chain (And Its Impact On Prices)

We’re sure you’ve noticed by now that supply chains across industries have faced notable disruptions. Of course, the solar supply chain is no exception. Today, we’re here to talk about what’s going on in the solar industry and, more importantly, what Robco is doing to ensure that you feel as little of the adverse effects as possible.

If you previously received quotes from installation companies for your solar project and request new ones today, it is likely you’ll see notable price increases or be informed that the company isn’t able to commit to completing your install due to a lack of materials.

With companies facing pinch-points and rising component prices, many have no choice but to pass on these expenses to you, the end customer. Perhaps what makes this shift so abrasive is the fact that people have become accustomed to the trend of solar prices decreasing every year as the industry grows and technology improves. This is the first time that the industry has seen prices increasing quarter-over-quarter and year-over-year across all market segments. Taking it a step further, Rystad Energy analysts estimate that shipping conflicts and rising material costs could result in 56% of 2022 solar projects worldwide being postponed or canceled completely.

So, where in the solar supply chain are these disruptions happening?

There are two main points of disruption in the solar supply chain: port delays and material costs. Both of these issues feed into one another and serve to create a downward spiral for the industry’s supply chain as a whole.

With shipping backlogs at virtually all ports, product shortages and price increases are a given. Currently, shipping a container via a primary U.S. port takes three times as long as normal. At the Port of Los Angeles alone, roughly 200,000 shipping containers are still onboard ships along the coast due to the current gridlock. Additionally, with the peak holiday season in full swing, the situation is set to face even greater pressure as demand increases even more. Current projections predict that port delays, and the resulting product shortages, will continue until mid-2022.

solar supply chain
Source: NASA Oct. 10 2021, satellite image of ships waiting to dock at ports of Los Angeles and Long Beach

 On top of the increase in shipping prices and related conflicts, there have been drastic increases in material and manufacturing costs for solar panels. These price increases are the result of the bullwhip effect, which was triggered by the halting of production during the pandemic. Prior to manufacturers being shut down, there was a surplus of polysilicon available. However, once restrictions lifted and production began again, the economic bounce-back occurred faster than anticipated. As a result, demand exceeded what manufacturers were prepared to handle and prices skyrocketed.

solar supply chain

With an increase in the cost of polysilicon by over 300%, the manufacturing costs for modules have increased by nearly 50% between 2020 and the end of 2021. Other necessary raw materials have also seen price increases that have added pressure to the manufacturing costs and, in turn, increased the prices of panels themselves.

Now that we understand what’s going on, what is Robco doing to serve you despite the disruptions?

Providing concierge style customer service is significant to everything we do, and an aspect of that is anticipating the pain points of our customers before they even have a chance to reach you. Knowing supply disruptions were only set to get worse, we ensured we secured enough inventory to cover our installations for the next six months.

That’s right. When you sign your contract with us, you can rest assured knowing we are more than ready to complete your project.

With that being said, even with our preparedness, we aren’t immune to the inflation of material costs. In response to the increased prices of our manufacturers, you will see our quoted project costs increasing in January.

So, if you know you want solar, don’t wait.

We strive to be forward-thinking and customer focused, we will continue to actively seek out ways to minimize any negative impact on our customers. We hope that this post has provided clarity surrounding the solar supply chain and assurance that we are doing our due diligence.

If you still have questions regarding this topic, or any other, please reach out. We are always here to help!

In the mood to dive deeper into all things solar? Check out the rest of our blog posts here!