Last year there was much speculation about what was coming down the pike. There were plenty of forecasts – and not just from me. Based on factors known to influence the market, such as module price development and other less distinct aspects – factors like the political and regulatory situation in high-volume markets or expected technological breakthroughs - the course appears to be more-or-less clearly mapped out.
But the year is still too young to lend certainty to expectations or to spring any big surprises. Nevertheless, the past few years have shown time and again that as sure as the sun will rise, bumps in the road will come when they are least expected.
First, we were caught off guard in Central Europe with unusually early and severe winter storms and flooding. With the abundance of PV systems today, it goes without saying that buildings without photovoltaics were not the only ones affected. The maintenance and repair business has the capricious weather to thank for its first orders this year. However, it is not advisable to combine reconstruction with a planned repowering. It is important to be on the safe side of the law in this case to ensure that the feed-in tariffs are not lost in a backfired attempt to boost profits.
As already reported last month, the gradual reduction of minimum import prices across all module groups is having an effect. An average reduction of 2 cents per watt at the beginning of the year can be observed, at least for higher-priced products, whereas the prices for standard polycrystalline modules and special lots have fallen only moderately so far - namely on the order of 1 cent per watt. This was to be expected, however, as there is still insufficient availability of these sought-after, reasonably priced products. Many installers are still biding their time to see whether the prices nudge down a bit before they buy any modules or sign contracts.
The absolute prices for modules with high efficiency by area ("high efficiency" and "all black" products) appear, at 0.48 or 0.47 euros per watt-peak, somewhat too high compared to the general market sentiment. However, it should be noted that figures in the index are not weighted by supply volume. The prices for small lots of mono-PERC cells or other efficiency-enhancing cell and module technologies are on an equal footing with project and wholesale prices for high-performance poly-PERC modules. Products from manufacturers such as Panasonic, Sunpower and LG are known to be traded at prices significantly higher than the average.
What advice can we offer project developers, installers or contractors regarding their purchasing strategy? Well, it depends a bit on the options available to them, which can vary considerably from project to project. If a high level of commitment is required; that is, on-schedule construction and a fixed purchase price, a contract model with more certainty is advisable. In this case, suppliers offer the reliable provision of the goods required on a monthly or quarterly basis. With appropriate security, such as a deposit on the next consignment or even the entire contract amount up front, the modules or even all the other components are held in reserve exclusively for the contractual partner. Of course, these goods then have to be retrieved by the respective deadline, at the latest - a delay due to disruptions during the project is usually not an option.
Other suppliers are embracing a more flexible model. In this case, certain quantities, dates and prices are also defined but without a definite obligation to purchase. Bonuses are sometimes added to the agreement to increase the incentive to reach or exceed the mutually agreed volumes. With this type of arrangement, there are generally no restrictions in place if the purchase target is not met. However, the non-binding obligation on the purchaser's side comes at the cost of a certain non-binding obligation on the supplier side. Should the goods become scarce again, buyers may have to wait for the goods and may not be able to retrieve the desired quantities, or they may have to dig a bit deeper into their pockets.
Irrespective of the contractual model, it is always advisable to discuss module quality with your supplier at an early stage, to announce spot checks and include relevant provisions in the agreement. These should regulate with legal certainty which measures are to be taken if the products supplied do not meet expectations. Trust is good - control is better! In his recent blog post (in German: https://blog.neue-energiewelt.de/qualitaet-pv-speicher/), Kalle Remmers illustrated for us – in rather forceful and drastic terms - that this general wisdom can be applied in particular to the photovoltaic business. Even the biggest manufacturers sometimes make mistakes but are not always willing to admit them and provide an immediate fix. It is important to be vigilant and not to cut corners in the wrong places. It will be interesting to see what other ripples Kalle’s latest statement makes in the industry.
Overview by technology of different price points in January 2017, including the changes over the previous month:
