Solar Energy Monthly Report | December

16 December 2021

Solar Energy ETF Monthly Report: Key Takeaways

Global solar PV deployment is on track to grow by 17% this year despite surging commodity prices increasing manufacturing costs, according to the International Energy Agency (IEA). With utility-scale solar providing the lowest cost of adding new electricity capacity in the significant majority of countries worldwide, especially in the context of increasing natural gas prices, the IEA expects 156.1GW of PV to be added globally in 2021. [1]

Headwinds from commodity prices are not expected to have had a significant impact on demand for new solar capacity from governments according to the IEA, with governments making no major policy changes of cancelling auctions, while corporate buying is on pace to break another year-on-year record. Since the beginning of 2020, prices for PV-grade polysilicon are said to have more than quadrupled, steel has increased by 50%, aluminium by 80% and copper by 60%. This has been compounded by massive increases in freight fees from China to Europe and North America, in some cases ten-fold. The IEA estimated that commodities and freight costs make up about 15% of total utility-scale solar PV investment costs and suggested that the overall investment cost of utility-scale PV plants could increase by around 25%, based on a comparison of average commodity prices between 2019 and 2021. Despite higher prices, the IEA says that demand for solar from governments has not shown signs of being impacted. [2] 

Germany’s new three-way coalition government of the SDP, Green and FDP parties have set enhanced energy goals and doubled solar PV target to 200GW by 2030. They have also increased the country’s renewables target to 80% of electricity demand by 2030, up from 65%, and brought forward the coal phase-out date from 2038 to 2030. [3] 

US utility-scale solar deployment jumps 38%. The first nine months of 2021 saw US utility-scale solar additions reach 8,410MW, a 38% increase on the same time last year, according to an analysis of new government data by research organisation Sun Day Campaign. The jump in deployment meant solar led additions, representing 44% of the total 19,022MW utility-scale generation capacity installed in the country between January and September, followed closely by wind, with 8,188MW deployed. Renewables accounted for nearly 88% of new capacity added during the nine months, up from 64% during the same period last year, data from the Federal Energy Regulatory Commission (FERC) showed. [4] 

Please note that all performance figures are showing net data.


Macro Outlook

Polysilicon production capacity is expected to double over the next few years

 If polysilicon production increases, this should relieve the raw material pricing pressure and allow the price of polysilicon to resume its long-term downtrend, helping to reduce margin pressure for many solar companies.

Several polysilicon capacity expansions from industry cost-leaders are due to ramp up production in early 2022, which should bring some balance back to the market. These include 40,000 MT/year of capacity from Daqo, due to ramp to full production in the first quarter of 2022, and 100,000 MT from Tongwei, notionally due online in late 2021, but not ramping to full output until the first two quarters of 2022. It also includes 30,000 MT from Asia Silicon, due to ramp in the first quarter of 2022, and expansions from East Hope and GCL-Poly in early 2022.

Beyond this, just how much prices fall later in 2022 will depend on the exact timings of other new capacity expansions, and how quickly they can ramp to full production of mono-quality material. Although there is some uncertainty around the exact timeframes for some of these expansions, not to mention whether planned timeframes will be met, it’s clear that through 2022 and 2023 there is a very significant volume of new capacity due online from the leading manufacturers.

With overcapacity looming and manufacturing costs at industry leaders such as Daqo and Tongwei being below $6/kg in 2020, the long-term outlook appears set for lower polysilicon prices, much to the relief of those further downstream in the PV industry. [5]


Solar Energy ETF Performance (As of 30.11.2021)








Solar Energy UCITS ETF







EQM Global Solar Energy Index







Please note that all performance figures are showing net data.Source: Bloomberg / HANetf. Data as of 30/11/2021
Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. Please note that all performance figures are showing net data.


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