The sun is shining brightly on the solar industry, but not for manufacturers. A price war of epic proportions is raging, with record low prices for solar panels sending shockwaves through the supply chain. This intense competition, however, is a boon for consumers and installers, leading to a surge in solar adoption globally.
The driving force behind this price war? Innovation and oversupply. Polysilicon, the backbone of solar panels, has seen its price plummet by a staggering 77%, dropping to a historic low of $5.58 per kilogram on July 10th, according to Bloomberg New Energy Finance (BNEF), a premier consulting organisation. This has led to a surge in production in China, with the first half of 2024 seeing a whopping 895,400 metric tons produced – enough to create a massive 420 gigawatts of solar modules! This glut has cascaded down the production line, with wafer prices tumbling 48% and cell prices dropping by a significant 39% since the beginning of the year. The result? Solar panels are now being sold for a record low of less than 10 cents per watt.
Meanwhile, China’s solar exports have increased in volume but decreased in dollar value due to falling prices. Strong demand from Europe and emerging markets like Pakistan has kept Chinese PV exports high, even as revenue declines. Export volumes stabilised at 28GW per month in April and May, resulting in a total of 144GW of solar cells and modules shipped from mainland China in the first five months of 2024. This represents a more than 70% increase over the same period last year.
Manufacturers are feeling the squeeze across the board. Polysilicon producers are reducing production by temporarily shutting down factories for maintenance, while wafer makers have halved prices of new n-type wafers, leading to negative profits in the first quarter of 2024. The price of PV glass has also declined, with 3.2mm glass dropping by 9% and 2.0mm glass by 13%.
Compounding the financial strain on manufacturers, the price of silver, a key material in cell production, has soared to its highest level in a decade. Additionally, shipping costs have hit a two-year high, exacerbating the challenges faced by the industry. Despite these hurdles, global solar trade has seen a temporary boost, particularly in the US, India, and Brazil, where imports of solar products have surged in the early months of the year.
While European markets are still clearing out older PERC technology, the US is embracing the latest advancements. Production-linked subsidies from the Inflation Reduction Act are fuelling a record-breaking import spree, with American companies snapping up cutting-edge TOPCon solar panels at bargain-basement prices. Monthly US solar imports reached a record 6GW in April, with over $6.2 billion worth of solar modules imported from January to April. New tariffs on Southeast Asian imports could significantly increase module prices, causing some manufacturers to pause production while awaiting a final decision.
Galling to the manufacturers, the price war seems to be a win for emerging markets like India and Brazil, which are experiencing a surge in solar imports. India, for instance, has seen a 113% increase in solar cell and module imports compared to the same period in 2023, which indicates a strong demand for solar technology, with nearly 76% of these imports coming directly from China. This translates to a staggering $2.4 billion worth of imported solar technology as of April 2024. Japan, too, is witnessing a boom in solar adoption, driven by corporate clean energy initiatives. Despite currency fluctuations, solar module prices are falling in local currencies, making solar power an increasingly attractive option for businesses and homeowners alike.
The current situation presents both challenges and opportunities for the solar manufacturing industry. While companies grapple with razor-thin margins, these price wars are accelerating the adoption of solar power globally. As the market adjusts and new technologies emerge, the industry is poised for a period of sustainable growth that will benefit all stakeholders, from manufacturers to consumers and the environment.
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