ANALYSIS
PV prices drop but at what cost?
The revenue returns for the photovoltaic industry are expected to
dramatically fall in 2009. This will create a precipitous drop in module
price but will achieve the industry goal of making solar cheaper.
Jon Cassell, Henning Wicht and Stefan de Haan of market analyst
company iSuppli look at the causes for the changes and the
potential industry impact.
B
ringing an end to eight consecutive Ironically, the oversupply and resulting pricing and
years of growth, global revenue for revenue declines are the consequence of the
Photovoltaic (PV), panels is expected to plunge by overwhelming success of the solar industry.
nearly 20 percent in 2009, as a massive oversupply “Due to the political impetus to save fossil energy
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causes prices to drop, according to iSuppli Corp. resources, both for carbon dioxide emissions and
Worldwide revenue from shipments of panels will to prepare the future energy infrastructure, solar
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decline to $12.9 billion in 2009, down 19.1 percent demand has been booming,” Wicht observed.
.solar
from $15.9 billion in 2008. A drop of this magnitude “Attractive margins and excellent long-term
has not occurred in the last 10 years and most prospects have caused a flood of new competitors
-pv-management.com
likely has never happened in the entire history of to enter the PV market, spurring oversupply
the growing solar industry. throughout the value chain, from the essential raw
material polysilicon to complete solar panels.
The plunge in revenue will come despite an 9.6 Economies of scale matter in the solar
percent rise in Gigawatt (GW) installations of solar industry. Aiming for the lowest production
panels in 2009, growing to 4.2GW for the year, up costs by using large-scale
from 3.8GW in 20081 (* 1,1 GW for Spain, manufacturing, companies have
Issue I 2009
preliminary). However, 11.1GW worth of panels expanded their production
will be produced in 2009, up 45 percent from from year to year. But
7.7GW in 2008. This means that supply will exceed
demand by 168 percent in 2009, up from 102
percent in 2008. With the gap between supply and
demand rising to such a level, pricing and market
revenue will drop in 2009.
“Supply and demand were already unbalanced in
2008 with 100 percent more modules produced
than installed,” said Dr. Henning Wicht, senior
director and principal analyst, photovoltaics for
iSuppli. “The short-term boost in demand from
Spain and Germany kept installation
companies busy and solar orders and
module prices high. But this boom is
over. In 2009, average prices for panels for
new installation contracts will collapse to the
$2.50 to $2.75 per watt range by the end of 2009,
down from the 2008 level of $4.20 per watt. The
average price for the year will be $3.10 per watt.”
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