Several big solar panel makers are ramping production in a boon to clean energy. A key reason: the collapse of material costs that had been elevated for more than a year.

Three leading Chinese module manufacturers are bumping up January forecasts, according to Shanghai Metals Market, which didn’t identify its sources. Promising near-term demand is another factor driving the output boost.

Longi Green Energy Technology, JA Solar Technology, Jinko Solar and the China Photovoltaic Industry Association didn’t immediately respond to request for comments.

The world is racing to fight climate change, but accessing solar panels has been a challenge in some markets including the US. A surge of cheap panels would help countries reduce their dependence on fossil fuels and potentially lower power prices.

Solar demand has been growing for several years, but manufacturers were hamstrung in 2021 and 2022 by a rare stretch of increasing material costs for polysilicon — a key material for most panels.

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But those problems are rapidly fading. Several new polysilicon factories came online at the end of last year, and costs for the material have dropped by more than a third since mid-November, according to BloombergNEF. And the prices of wafers — the ultra-thin polysilicon squares that are pieced together to make panels — have fallen even more sharply.

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Wafer costs fell as much as 21% this week, with some manufacturers cutting activity to as low as 55% as their profitability is at risk, the China Silicon Industry Association said in a statement on Thursday. Polysilicon prices plunged to as low as C¥145 (R362) a kilogram this week, from last year’s high of C¥306, the association said in a separate statement on Wednesday. — (c) 2023 Bloomberg LP