China’s energy crisis, force majeure and its immediate impact on supply and pricing

Coal shortages, increased power demand leading into the Northern hemisphere Winter and carbon emission reduction targets have led to Chinese authorities mandating energy rationing. In the past week this has triggered immediate restrictions on manufacturers across China, including many of those servicing the global solar industry.

Manufacturers have been forced to significantly reduce their output, and in some cases shut down altogether, effective immediately. This has been deemed a force majeure event which has already seen some panel manufacturers renegotiate existing pricing and agreements.

As such, this will significantly impact the availability of stock and lead to price rises in Australia and New Zealand.

What impact will this have on pricing?

Given that China is the world’s biggest supplier of solar technology and equipment, these disruptions are driving supply shortages and rapid price increases.

Some scheduled shipments to Australia and New Zealand have already been delayed, or even cancelled.

We are anticipating that the combination of raw material constraints, production stoppages and logistics challenges will cause a rise of up to 10% to the installed cost of solar systems from this week onwards.