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

ship with shipping containers aerial view

Explainer: 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 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.

How can a payment plan help a business absorb this price increase?

As the price of equipment is rising rapidly, this may mean solar is less affordable to businesses and organisations right now. In certain cases where a proposal has been submitted, pricing may need to be renegotiated and upfront payment may no longer be an option for some customers.  

That’s where the role of a payment plan becomes even more critical. Energy Ease Payment plans enable customers to pay for projects over time, in smaller affordable instalments, without having to bear the full upfront impact of price increases.

By doing so customers can also often be cash flow positive sooner because their installments are less than their energy bill before solar was installed. A silver lining despite these unprecedented circumstances.

If you want to discuss any projects needing a payment plan option, please get in touch with our team on 0800 795 695 or  enquiries@energyease.co.nz

For further background on this you can read here and here.