Will silicon shortage disrupt plans for solar energy installation?

If you follow the news on the solar industry, or if you have leased a part of your land for a solar energy installation, you may be aware that there is a shortage of silicon, a mineral needed to produce solar modules. That shortage just became more urgent when the U.S. identified the Hoshine Silicon Industry Company, a major silicon supplier in Xinjiang province, China, as producing materials using forced labor.

It is illegal to import materials produced by forced labor into the United States, so any company that manufactures silicon-based products will now have to make sure the silicon does not come from the Hoshine Silicon Industry Company. Since Hoshine is a major supplier, that will mean supply chain issues, according to an analysis on Reuters.

Unfortunately, that will be on top of existing supply chain issues, where products have been held up on ships due to backlogs at ports around the globe. The loss of a major supplier of silicon will only this.

The good news, according to the analysis, is that the solar energy manufacturing sector has proven itself to be quite nimble. Past shortages of silicon have been due to various issues, but one of them was tariffs. That prompted the industry to uproot itself entirely from the U.S. and Europe and relocate to China. Later, the industry moved to Taiwan, and now it is centered in Southeast Asia generally.

The energy industry generally, and solar energy in particular, have also proven themselves to be resilient. It has weathered the storms of past silicon shortages and shifting political winds.

How much will these issues affect the project on my land?

If you have leased your land to a solar development that has not yet been completed, you may be wondering if the project will become less profitable for you or even get canceled. Have you gone to all this trouble only to lose out on the benefits that were promised?

It depends on what your lease says. If your lease does not contain a provision that allows the company to cancel the project, it would be breaking your lease if it canceled. If your royalties are locked in, the company would be breaking the lease if it tried to offer you less.

If you are unsure what your lease says about these issues, you might want to have an energy law attorney review it for you. Or, you could wait for a dispute to arise and call a lawyer at that point.

Contacted by an energy company about leasing your land for a solar project?

This is just one issue that a well-drafted solar energy lease might cover. If you have been approached by an energy company about leasing your land, don’t assume the lease they are offering is your only choice. You have the right to have your own energy law attorney review it and negotiate any necessary changes.