Guggenheim Solar Index: PV supply chain shake-up

Solar stocks have underperformed in the broader market in August, writes Jesse Pichel of ROTH Capital Partners. Project delays could be on the horizon as more module imports are held up at customs, and the supply chain will start to see impacts as suppliers look for options to source polysilicon outside of China.

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From pv magazine 09/2021

09010_Stock_Index-21_2sp-1The Invesco Solar ETF, an ETF that tracks the MAC Global Solar Energy Index, underperformed relative to the S&P 500 and Dow Jones Industrial in the month of August. The Invesco Solar ETF (TAN) decreased 7.0%, while the S&P 500 increased by 1.1% and the DJIA increased by 0.5% in August. The top five performing solar stocks in the U.S. market witnessed gains and losses. They include Array Technologies (38.8%), First Solar, Inc. (9.9%), SolarEdge Technologies (4.0%), Hannon Armstrong Sustainable Infrastructure Capital (0.5%), and Atlantic Sustainable Infrastructure Capital, Inc. (-3.3%).

Up to Aug. 25, the Invesco Solar ETF has experienced a pullback. Looking forward, the U.S. industry outlook for the remainder of the year is uncertain. In late June, the U.S. Customs and Border Protection (CBP) issued a withhold release order (WRO) on imported silica-based products produced by Hoshine Silicon Industry Co., one of the world’s largest metallurgical-grade silicon producers, for allegedly using forced labor in the Xinjiang region of China. With the CBP making more detainments this month, many major players could continue to face a negative impact, as additional detainments are likely to follow.

The WRO on Hoshine-affiliated products could shake up the supply chain. Currently, Array Technologies (ARRY), Canadian Solar (CSIQ), Daqo (DQ), FTC Solar (FTCI), Hannon Armstrong (HASI), Jinko Solar (JKS), Shoals Technologies, (SHLS), and Renesola (SOL) are facing potential project delays, as not enough modules can make it into the country in time.

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Others, such as First Solar (FSLR), Sunpower (SPWR), and Maxeon (MAXN) could benefit from additional enforcement, as Hoshine is not included in any of their supply chains. While the CBP looks to define the compliance process and establish a system to trace silica-based products, delays in projects will occur. As a result, companies will look for alternative non-China options to source more polysilicon.

By Jesse Pichel

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