Market Analysis December 2012 - Prices are still falling – but what will 2013 bring?

The prices for solar modules kept on falling from November to December. The main reason might be the effort of distributors to keep their stocks as small as possible at the end of the year. 2012 has been a turbulent year for the solar industry in general, characterized by a continuous, rapid price decline. Within the last 12 months the prices for crystalline modules from China decreased the most (-34%), but there has been a significant drop in prices in all categories, ranging between 25% and 34%.

There are many reasons for this situation: Early in 2012 the overcapacity among manufacturers of crystalline cells and modules as well as among leading inverter manufacturers did lead to stocks  that could not even be significantly reduced by short-term peaks in demand. Bound liquidity, lower sales volumes, higher costs and incredibly low margins increased the pressure on all producers equally. This pressure was too much for many European manufacturers who grew rapidly during the boom years and overextended themselves financially. But also manufacturers of thin-film modules got in trouble because of the silicon price decline. Looking at this part of the industry in December 2012, there are almost no suppliers of modules with amorphous or microcrystalline amorphous cells anymore. Even manufacturers of CIGS or CdTe-CdS products have become a rarity. The once-promising "new" technologies that were supposed to revolutionize the material consumption and price structure have become high-priced niche products.

What developments will take place in 2013 regarding the photovoltaic industry? The variety of manufacturers and products is expected to shrink further as the consolidation phase is far from complete. However, a few of the well-known brands we have heard very little of lately because of the many insolvencies last year could become more pronounced again with the help of new, mostly Asian investors. The dispute over import and trade restrictions on Chinese modules will keep the industry on tenterhooks for a few months but is probably not able to change much regarding the desolate situation of many European and North American manufacturers. Chinese companies have already brought themselves in a good position through acquisitions in the relevant markets.

At least temporarily the Feed-In Tariffs in Germany and other European countries will keep on underlining the fact that building PV systems stays worthwhile, but the structural change is already in progress. Energy storage systems will play a major role in future systems, as well as new marketing models for renewably generated electricity. In addition, manufacturers such as wholesalers bethink themselves of an old saying from the retail business: "The customer is king". In 2013 we are going to see many ambitious programs and individual activities which are designed to acquire new, to hold or develop existing business partners. The customer and order acquisition is no longer left to chance, but is probably going to be declared “top priority” throughout the industry sector and all levels of the value chain.