A key selling point that has made solar the fastest growing energy source in the world – rapidly falling costs – has seen a surge in speed.

Solar panel prices are up 18% since the start of the year, after falling 90% over the past decade. The reversal, triggered by a quadrupling in the cost of its key commodity, polysilicon, threatens to delay projects and slow the uptake of solar energy just as several major governments are stepping down to slow climate change.

“Solar disruption hasn’t been this bad in more than a decade,” said Jenny Chase, senior solar analyst with the BloombergNEF clean energy research group. “Developers and governments need to stop expecting solar power to get much cheaper quickly.” In a report last week, BNEF slightly lowered its forecast for solar expansion this year, citing rising material prices including polysilicon as the reason.

Panel manufacturer Canadian Solar Inc. announced on Thursday in a call for profits that higher prices are having an impact on demand and could delay some major projects. In India, around 10 gigawatts of projects could be affected, which is more than a quarter of the country’s current capacity, Mint reported, citing unnamed developers. According to analysts from Cowen & Co., major projects in the USA could also be postponed.

Projects that haven’t signed pricing agreements with utilities who buy the electricity may be delayed unless the customer is willing to pay a higher electricity tariff, according to Xiaojing Sun, an analyst at Wood Mackenzie Ltd.

For the solar industry, the timing couldn’t be worse. Renewable energies finally have a champion in the White House and ambitious climate targets have been announced across Europe and Asia.

At the heart of the crisis is polysilicon, an ultra-refined form of silicon, one of the most abundant materials on earth, commonly found in beach sand. As the solar industry prepared for an expected increase in module demand, polysilicon manufacturers could not keep up. Prices for the cleaned metalloid have hit $ 25.88 per kilogram, according to PVInsights, down from $ 6.19 less than a year ago.

According to analysts from Roth Capital Partners, including Philip Shen, polysilicon prices are likely to remain strong through the end of 2022.

And the problem isn’t limited to polysilicon. The solar industry is facing “profound challenges in terms of upstream supply chain costs,” said panel manufacturer Maxeon Solar Technologies Ltd. in April.

Solar panels are made from sand that is heated and cleaned into bars of ultra-conductive polysilicon that are cut into wafer-thin wafers, wired into cells, and then assembled into panels that mount roofs and cover vast fields.

The prices for steel, aluminum and copper have risen, as have freight costs. Solar microinverter supplier Enphase Energy Inc. believes that its shipping volume will be limited by the availability of semiconductor components.

“It’s very painful after polysilicon,” said Canadian solar vice president Xiong Haibo at a conference in China, according to industry publication Solarbe. “Currently, none of the downstream companies are profitable and all are reducing production.”

However, the disruption to the long-term downtrend in costs is partially offset by continuous improvements in solar panel efficiency, said Nitin Apte, chairman of the board of Vena Energy Pte., A leading independent renewable energy operator in the Asia-Pacific region. The company has no plans to delay its solar projects in Japan, Taiwan, Australia and India this year.

“I see this as a short-term situation and some projects may affect our contingencies,” Nitin said in an interview at his Singapore office. “We’re not slowing down construction. We block orders at the best prices we can get. “

Long-term, the bottlenecks are driving new polysilicon plant construction, including the announcement of the world’s largest facility in China earlier this month.

“One would expect that any material that exhibits the growth of polysilicon would continue to have capacity injected into the system,” said Nitin of Vena. “The challenge is to perfectly match this capacity with growth.”