This slogan will set the tone for European module price developments in the first quarter of next year. What was already hinted at in the last quarter is becoming increasingly certain. On module orders for delivery in the coming year, there will be a discount of at least 10 percent compared to contract prices charged in 2017.
This corresponds to a price for bulk purchases of 33 to 35 cents for polycrystalline and 39 to 42 cents for more efficient monocrystalline products. This price level is already reflected in the spot market, but only in the case of absolute fire sales, i.e. surplus lots or the resale of contract quotas, which have to be liquidated this year.
In particular, modules from Tier 1 manufacturers are not available in unlimited quantities on any given date. Most major manufacturers claim to be fully booked up at least until the end of the first quarter, if not the entire second quarter of 2018. New customers with a need for inexpensive project modules are sometimes put on hold until April, May or June or have to make do with more expensive monocrystalline modules. This raises the question of whether installers and project-oriented companies should begin stocking up on spot market goods, even though the modules will only be needed in a few weeks' or months' time. At least when it comes to smaller quantities of less than one megawatt, there is currently still a relatively good selection.
But let's turn briefly to the past year - which of the forecasts made at the end of 2016 have actually materialized and which have not?
The arrival of poly-PERC products which I forecast has not yet taken place on a very broad scale. Keeping the higher initial light-induced degradation (LID) within limits seems to proven too complicated for many manufacturers. Although polycrystalline 60-cell panels with outputs beyond the 280-Watt mark are still a rarity, mono-PERC has also failed to gain acceptance to the extent expected. All in all, manufacturers and above all their customers have placed a strong focus on lower-priced modules in lower performance classes (“Mainstream”). Traditional suppliers of high-efficiency modules such as LG, AUO-BenQ and Sunpower probably lost market share. Likewise, SolarWorld AG also dropped off the radar and, despite a change in strategy, it has been unable to hold its own and has failed regain its feet following its insolvency. Confidence in this brand seems to have been severely undercut, and the allegedly loyal customers seem to have quickly moved on.
Overall, however, at least module prices in 2017 have fallen less than expected, or hoped for, following their mid 2016 price slide. For some technologies (“High Efficiency”, “All Black”), the decline in prices over the entire past year was only half as severe as that of the second half of 2016 alone, while for polycrystalline modules between 250 and 275 watts-peak, prices have held more or less steady. The lower price dynamics of modules were offset by a rapid drop in the price of energy storage systems. For example, small storage-linked systems have once again fallen significantly in price compared with the previous year. IHS Markit forecasts a bright future for the small-scale PV sector in Europe with further significant growth rates.
Despite the relaxed market restrictions imposed by the EU Commission, there will probably not be a flood of Chinese products in the foreseeable future, as their domestic markets continue to be too attractive for manufacturers. In addition, there are now sufficient production capacities outside the Middle Kingdom to serve regions such as the USA and Europe. However, a bottleneck is not expected in Europe due to the expected strong increase in demand for large-scale plants in Spain and France because sales in the USA will probably decline markedly at the same time. Panic buying by American solar companies fueled by the anticipated tightening of import restrictions has probably come to an end, so that more MIP-free goods will find their way back to Europe.
Price pressure will likely be exerted primarily by Asian Tier 2 producers, who are now regaining momentum as a result of the gradual reduction in minimum import prices. For example, some major manufacturers have already adjusted their pricing policies to the respective quarterly MIP levels, possibly motivated by the expectation of a shortage during the course of the year, as we saw in 2017. If this were to happen, it would again permit moderate price increases despite the competition. If necessary, bottlenecks could also be created by converting production lines to higher-quality products or by controlling the flow of goods and limiting them in certain markets.
But let’s not paint such a gloomy picture; instead, we should look forward with confidence to the coming year 2018! IHS Markit sees at least 15 percent worldwide growth in photovoltaic installations despite the alleged shortage of supply, and I fully endorse that forecast. So, will 2018 be another super year for solar? Get ready for peace and the energy transition!
Overview by technology of different price points in December 2017, including the changes over the previous month:
