SINGAPORE (Reuters) – Prices of solar panels, which nearly halved over the last 12 months, will remain at current levels for up to two years, a Malaysian industry executive said on Tuesday.
Manufacturers in Malaysia, the world's third largest producer of solar photovoltaic modules (PV), are slowing down expansion plans to adjust for lower demand and prices, Davis Chong, President of the Malaysian Photovoltaic Industry Association, told Reuters.
"The upstream supply is roughly double the downstream demand. It will take about one to two years to adjust and balance the supply and demand," said Chong, who also serves as the Chief Executive Officer at Malaysia's Solarvest.
He said lower prices presented an opportunity to boost installation of solar projects globally.
"It is a good time to expedite and deploy more solar projects. With more favourable and transparent policies, countries as well as industries can capitalise on this trend," he said.
The cost of producing solar panels in China, which accounts for about 80% of global consumption, plummeted by 42% in the last year, giving manufacturers there an enormous advantage over rivals in places like the United States and Europe.
Multiple European solar manufacturers have announced plans to close factories in recent months, under price pressure from Chinese imports.
Chong said US President Joe Biden's move to offer billions of dollars in tax credits for facilities using American equipment to speed decarbonisation of the US power sector will not challenge China's dominance in solar manufacturing.
"This supply chain will still follow the principle of supply demand and economies of scale in the long term," Chong said, adding that China will continue to dominate global solar PV supply.
"By limiting the entry of cheaper PV modules from Asia to the US, it may affect the bankability and competitiveness of the solar PV projects there," he said.
Solarvest is in talks to raise S$50 million ($37.24 million) to S$100 million in equity through its Singaporean entity, Chong said, adding that it is targeting increasing its solar capacity to 2 GW in 2025, from 1 GW currently.
"This is set to complete within this year and will serve as the first tranche of money to be deployed into projects in Asia Pacific," he said.