The prices of raw materials used in solar panels, such as silver, aluminum, and copper, have begun to rise globally, while the cost of solar projects in Nepal is expected to increase due to factors including the cancellation of tax exemptions provided by China on solar exports.
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The price of solar panels has started to rise in the global market due to the increase in the prices of raw materials such as silver, aluminum and copper used in solar panels and the new tax policy of the producing country China. The international media Financial Times has also mentioned that there are signs that the ‘era of ever-cheaper solar panels’, which has long been the main basis for the rapid expansion of renewable energy around the world, is coming to an end.
The Chinese government has started to see a direct impact on the global market after it revoked the tax exemptions it had been giving on exports to stop the long-running intense ‘price war’ between Chinese solar manufacturers and to control unhealthy competition. The price of solar panels, which was 9 cents per watt at the end of December 2025, has increased in a few months to 11.4 cents by April 2026. Solar prices have rebounded from their lowest point and could reach 15 to 16 cents per watt by the end of this year, said Yana Hrisco, head of solar supply chain research at consultancy Wood Mackenzie.
The World Bank’s April 2026 Commodity Markets Outlook report said metals and precious metals prices have reached historic highs. The price of aluminum has risen by more than 10 percent in a single month as geopolitical tensions and war in West Asia have disrupted transportation and supply. Aluminum, used to make solar panel frames, rose from $2,632 per ton in 2025 to $3,200 in the first quarter of 2026, the report said.
The price of copper has risen from $9,947 per ton to $12. The price of silver has risen from $39.8 per ounce to $70. Despite the price increase, the sale of solar panels has not slowed down due to the energy crisis and increasing demand worldwide, especially in Africa and Asia.
This price increase in the global market is expected to directly hit the solar energy projects under construction in Nepal. The Nepal Electricity Authority has selected 960 MW solar projects from 63 companies through a competitive process to discourage electricity imports during the winter dry season and has initiated the Power Purchase Agreement (PPA) process for 25 years.
When the Authority called for proposals in Chaitra 2080, 3600 MW proposals were submitted from 134 companies. Based on the technical evaluation and financial proposals, 960 MW was selected based on the lowest price and the capacity of the substation. The Authority has fixed a maximum base rate of Rs. 5.94 per unit and has already signed 835.5 MW of the total selected projects, while 124.5 MW of PPA is yet to be signed. According to the terms, projects smaller than 10 MW will have to provide electricity within 18 months from the date of signing the PPA, and larger projects within 2 years.
The promoter says that there has been a big difference between the estimated cost when signing the agreement and the current cost. ‘The cost we signed the PPA and the current cost are different.’ Currently, the price of a panel is around 11-12 cents, but if it increases to 20-22 cents, then a ‘force majeure’ (circumstances beyond control) may have to be resorted to,’ said Akshay Golyan of Golyan Group, which has been awarded the contract for the 190 MW solar project.
He said that the current reduction in bank interest rates in the country has provided some relief and that they are focused on construction. According to estimates by energy think-tank ‘Amber’, about 2.9 terawatts of solar energy will have been installed worldwide by 2025, which is supplying about 8 percent of the world’s total electricity.
The cost of solar projects has increased by up to 25 percent due to the increase in the dollar, transportation costs and raw material prices in the international market, says Uttam Blon Lama, vice-chairman of the Independent Power Producers Association (IPPAN). He said that promoters have already spent up to Rs 10 million per megawatt on licenses, land purchase and studies.
Although there is a provision for 'escalation' (an annual fixed percentage increase) up to 8 times in hydropower projects to address price increases during the construction period, there is no such provision in solar projects. Vice-chairman Lama says that if there is a provision for escalation in solar projects as in hydropower, promoters will get relief from the skyrocketing costs. He says that the dollar was worth Rs 130 when he signed the PPA, but it has now reached Rs 150.
The government has mentioned that 10 percent of the total electricity generation will be from alternative energy. According to the Ministry of Energy, only 160 MW of solar energy is included in the national grid, out of 4,296 MW connected to the grid by April of the current fiscal year.
