PV module costs and prices–what is really happening?

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on email

It is earnings call season once again for solar PV module suppliers, and looking at the results of a number of the major suppliers, Q2’10 looks set to continue the market’s recent record setting trend. A few things immediately stand out from the first few calls this quarter:

PV Module Costs are Down

Given that feed-in tariffs (FiT) and incentive schemes in major PV markets such as Germany are set to continue decreasing, perhaps faster than some might have expected a year ago, it is not a surprise that suppliers are maintaining a strong focus on reducing costs. This is of course essential in order to remain competitively priced and profitable in an industry driven by a desire to gain independence from the subsidy schemes on which it currently relies.

First Solar has become well known for its low-cost manufacturing and did not disappoint in Q2’10, by driving its costs down 8% to $0.74 per watt, citing improved throughput, increased efficiencies, and reduced material costs as helping it achieve this.

As a result of the increased volumes and high utilizations predicted in the third quarter, IMS Research forecasts that module production costs will fall once again in Q3’10. However, as the supply of wafers remains short, crystalline cell manufacturers (particularly those that are not vertically integrated) are predicted to see increases in raw material costs, handing some advantage back to thin-film suppliers such as First Solar and making it more difficult to reduce costs further—in the short-term at least.

Are PV Module Prices Really Falling?

Another unlikely trend throughout the data that IMS Research has collected from Asian and US suppliers is the decline of factory-gate selling prices—certainly unusual, given the current sky-high levels of demand and tight supply. However, although in Q2 these suppliers are reporting a decrease in the revenue generated by each PV module sold, because of exchange rate issues this has not translated into any decrease in prices to wholesalers, distributors, or end-customers. So some caution needs to be taken when analyzing these companies’ Q2 results, since lower reported ASPs does not necessarily mean ASPs have gotten any lower!

Although Europe accounted for some 82% of PV installations in Q2’10, the vast majority of modules were supplied by companies recognizing their revenues in currencies other than the Euro. As such, currency fluctuations over the last quarter have resulted in great differences between the amount that suppliers supply their modules for, and the amount of revenues that they realise from that sale.

For example, Chinese crystalline cell and module manufacturer, Solarfun, announced last week that its PV module average selling price (ASP) had declined by 6.8% in the second quarter to RMB 11.19/W. However, converted to Euros (at the appropriate quarterly exchange rates), where the majority of its revenues are generated (Germany, Italy, Belgium, and France combined accounted for over 80% of its module shipments during Q2), the truth is its prices actually rose by 3.1%!

While the depreciation of the Euro (against the US dollar and the Renminbi) has negatively impacted the margins of many module manufacturers, European suppliers will appreciate, at least temporarily, the aid in their battle to remain price competitive on their home ground against the aggressive pricing of their Asian competition.

The Second Half of 2010 and What Happens Next?

There is almost no uncertainty surrounding demand for PV in the second half of this year, and 2010 will certainly prove to be another remarkable year for the industry. PV module shipments are forecast to increase by an incredible 60% over 2009 to reach 15.6 GW.

System integrators and project developers continue to rush to realise installations right through to the end of the year, particularly in Germany—despite the recent reductions in the EEG—driven by further cuts which will take place on October 1 and January 1, 2011. As a result, module shipments are forecast to increase to more than 4 GW in Q3’10 in order to complete and connect systems to the grid by the end of the year. Crystalline module prices are predicted to remain relatively unaffected by additional FiT reductions in Germany and are forecast to increase slightly (in Euros) in Q3, due to this strong demand.

Beyond 2010 the situation is less clear and questions remain over how the industry will respond to multiple FiT reductions in the largest European markets heading into 2011. A strong consensus is apparent in the market today that we will see another unhealthy drop in demand (similar to that experienced early in 2009 following the demise of the Spanish market) and the return of seasonality.

IMS Research forecasts that installations in EMEA will decline by 80% Q-o-Q in Q1’11. This, coupled with capacities that have been ramped to their maximum in order to serve the strong demand of H2’10, is forecast to quickly reverse the current imbalance between supply and demand, and average PV module prices are forecast to commence their downward trend once again.

One supplier with a more optimistic outlook for the new year is First Solar. The thin-film supplier recently announced that it planned to construct 500-700 MW of systems in 2011 and boasted a ‘captive pipeline’ of utility-scale business that would buffer any fluctuations in demand. Following its acquisition of project developer NextLight, First Solar plans to begin the construction of a massive 290MW power plant before the end of 2010 and install modules there throughout 2011.

One thing is for certain: most agree that 2011 demand cannot remain as strong as 2010, and if this is the case, not all suppliers can afford to be as optimistic as First Solar. 

10 November 2021
The solar tracker market continues to mature at breakneck speed, with designs and component selections becoming ever-more complex in the pursuit of better project economics. But a more simplistic design could deliver a triple benefit of lower Capex, EPC and Opex costs. This webinar will set out the ideal single axis tracker design for utility-scale solar farms. The design leapfrogs from decades of experience, with a comprehensive understanding and attention to the three cost structures of Capex, EPC and Opx. Sun and Steel Solar has prototyped a single axis tracker designed to deliver up to US$0.03/W in real savings compared to existing single axis trackers on the market. That’s US$30 million for every gigawatt deployed.
15 November 2021
The 10th edition of the famous Metallization and Interconnection Workshop, MIW2021, will take place in the Thor Central venue in Genk, Belgium, on Monday, November 15, and Tuesday, November 16, 2021 as a face-to-face meeting. We are longing for direct exchange of knowledge and ideas after a long time. Hopefully you can be part of it! But of course, the organizors will keep an eye on the evolution of the Covid pandemic. It will be assess carefully, whether the workshop can be held without major risks or excessive restrictions. We are looking forward to exciting talks, discussions and meetings and to welcoming you in Genk!
23 November 2021
The solar, storage and EV industries in the UK are going from strength to strength. There is no better place for the community to meet, share ideas and do business than Solar & Storage Live from 23-25 November at the NEC.There’s something for everyone; more than 150 exhibitors, a high-level conference, a start up and innovation zone, a poster zone, strategic partners to network with and much more. 
24 November 2021
In this webinar we will assess how these technical parameters and land characteristics can make a difference, in order to correctly make the choice between 1P or 2P trackers. There will be a comparison of the behaviour of Soltec’s 1P tracker, SFOne, and its 2P tracker, the SF7.
1 December 2021
Understand fully the technical and logistical supply chains that determine the production and performance of solar modules, including all related factors impacting quality, reliability & bankability. This event will be run online with streamed content, access to session recordings and chat/messaging tools for delegates to connect.
2 December 2021
Intersolar is the world’s leading exhibition & conference series for the solar industry. As part of this event series, Intersolar India in Mumbai is India’s most pioneering exhibition and conference for India’s solar industry. It takes place annually and has a focus on the areas of photovoltaics, PV production and solar thermal technologies. Since 2019, Intersolar India is held under the umbrella of The smarter E India – India’s innovation hub for the new energy world.

Read Next

October 27, 2021
Colombia has awarded contracts to 11 solar PV projects with a combined capacity of 796.3MW in its third renewable energy auction.
October 27, 2021
Microinverter supplier Enphase Energy reported record quarterly revenue in Q3 2021 but stressed the importance of price increases to help offset price volatility in its supply chain.
October 27, 2021
Spanish utility Iberdrola has expanded its investment in renewables and smart grid projects to €7.03 billion (US$8.15 billion) but its net profit suffered, falling 10.2% to €2.4 billion (US$2.78 billion), according to its recent financial results for 2021 release today.  
October 27, 2021
India installed around 8,811MW of solar between January and September 2021, a 280% increase on the same period of 2020, according to JMK Research & Analytics.
October 27, 2021
Swiss fund manager SUSI Partners is acquiring a portfolio of more than 200MW of distributed solar PV and wind assets in Chile, marking its first investment in Latin America.

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
November 10, 2021
8am (PST) | 5pm (CET)
Solar Media Events
December 1, 2021