Last week, Yingli Green announced a three-year c-Si module supply deal with AES. Last year, AES announced supply deals with First Solar, suggesting the cost-per leader was becoming the de facto choice for large-scale utility projects. Doubts surfaced over whether c-Si could effectively compete with First Solar and other thin-film technologies that had 10%-plus efficiencies, especially those with the manufacturing scale or plans for high-volume production.
However, the Yingli Green deal suggests that c-Si producers are fighting back and that the gap in cost-per-watt could fall, keeping c-Si attractive for utility plant projects.
That would seem to be the view of Barclays Capital financial analyst, Vishal Shah, after an investor note claimed that once the China-based PV manufacturer worked its way through higher priced polysilicon inventory and took advantage of lower prices, its production costs would decline to $1.3/W (Shah’s assumption was $85/kg poly price and 85c/W non-silicon cost).
Though Shah doesn’t expect a massive ordering spree from AES with Yingli Green in the short-term, he did note that at these lower production costs, First Solar customers could switch suppliers. This is based on the assumption of a €1.6/W panel price and that cost structures on both technologies would then decline at the same rate.
Although many would suggest that Yingli Green had offered very low prices to AES to gain exclusivity, Shah believes that Yingli’s margins will settle at 37.5% as the costs reductions kick in, allowing good competition to continue and the cost gap to close.