Market Analysis

Our Managing Director Martin Schachinger writes a personal market comment every month, which is published in trade journals like pv magazine in market reports from analysts like Mercom Capital, as well as in online platforms such as RECHARGE or the Solarserver. Here you can find the complete collection of all articles.

Prices for solar modules ticked slightly downward this month for the first time since February. The dip occurred for a number of reasons; one is the shortage of inverters and poor availability of electronic components, which is slowing the pace of expansion. Plant builders have warehouses full of PV panels but are limited in how many they can install because they lack critical system components. These installers have plenty of modules for the time being, which is why they are trying to delay pending deliveries as much as possible. This has left wholesalers and manufacturers sitting on some of their products, which they then have to try to bring to market elsewhere, sometimes at a discount.

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PV plants are not built to last an eternity, but they still have to serve their purpose fault-free for a very long time. Regular plant inspections are therefore a basic requirement for economical operation. The previous articles dealt with visual inspection systems at the module level and their importance. We now shift the focus to more thorough measurement-based inspections.

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It has been a few weeks now since Germany passed the long-awaited "Easter Package", the latest iteration of the Renewable Energy Sources Act (Erneuerbare Energien Gesetz, or EEG) which includes far-reaching changes intended to accelerate renewables in Germany. On the whole, the praise outweighs the criticism because the act contains numerous improvements and makes life easier for future investors and operators - in theory, at least.

One of the aims of the package is to expand solar power in Germany from the currently installed 60 gigawatts to 215 gigawatts by 2030. This would require an average of 22 gigawatts of newly installed capacity per year. To achieve this, feed-in tariffs will see a further rise. Monthly degression will be put on hold until the start of 2024 and replaced by semiannual degression from then on. On 1 July 2022, the EEG levy, an electricity tax, will finally be abolished. The resulting drop in the price of electricity would then be passed on to consumers. In future, the feed-in tariff will be financed through the federal budget. The new law puts an end to the mandatory cap on effective active power feed-in of 70 percent of installed PV capacity, at least for systems up to 25 kilowatts-peak.

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We in the solar industry are used to our share of craziness. For us, predictable business is more the exception than the rule. We are used to coping with all sorts of imponderables and coming to terms with them - chaos as usual. Companies that have mastered this well from years of training will probably be able to navigate their businesses through these troubled times. Nevertheless, I have to say that it has been a long time since the photovoltaic market has been as crazy as it is now. Prices are rising steadily across the board, but not for solar panels. I explain why below.

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The German saying in the title reflects current market development to a degree but, what I really wanted to express with it was how I "remade" the price index itself by tweaking the price categories. Continued advances in cell technologies and formats, particularly when it comes to steadily rising efficiencies, have necessitated some reshuffling so that specific price developments are reflected in the index more accurately in the future - but more about that later. First, we have to shed some light on the dramatic overall market situation for modules, and even more so for inverters and storage systems.

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Module prices in the index have been corrected upwards, and there is no relief in sight. Even more important than prices, however, is the issue of availability. The situation continues to deteriorate. While delivery times have so far been within reasonable limits, we are now slowly but surely moving toward a new bottleneck. But it is not so much the main components of the modules, such as solar cells or glass, that appear to be the cause of future problems; rather, it is the smaller components - junction boxes, plugs, encapsulant material, and so forth. Without these, no panels can be built. The overall disruption of the logistics chains mean that we can all expect delivery delays and interruptions in the near future.

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What’s wrong with the world, what’s wrong with us as human beings? It seems that one global emergency is not enough for us to deal with, we need two, no three crises at the same time! As if the impending climate crisis was not enough of a challenge, and not enough that the Covid-19 crisis still has us firmly in its grip - now, for weeks, a new global crisis in Ukraine has been affecting our everyday lives and the international markets. Meanwhile, it has become almost impossible to make even reasonably reliable forecasts on the future direction of PV panel and raw materials prices, availabilities and the viability of supply chains. Based on the information available, we can only speculate that supply chains will continue to deteriorate and that prices will therefore inevitably rise. Nonetheless, one thing is almost certain: our need for renewables is increasing, so that rather than declining, demand will continue to rise. Yet no one can say with certainty at the moment how well we will meet this rising demand in the future.

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The three-year peak in module prices now seems to have subsided. Prices are again in a slow but steady decline, particularly for project modules. For larger order quantities, panels in the 400W class and above can occasionally be ordered again at prices below the €0.26/W mark, with a delivery date of April or May at the earliest. Goods available on short notice, already produced and transported at higher costs, also trade at a significant price premium. This is the reason why this month’s index does not yet properly reflect current price development. We are still in the range of significantly above €0.30/W for high-performance modules. Although the price hikes of the past few months have levelled off, a real downward trend is not yet discernible at this point.

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Scarce goods, scarcity economy, delays, organizing, improvising - our fellow citizens from the former East Bloc know these terms all too well. The centrally planned socialist economies were characterized by shortages of almost everything that is readily available in today's consumer society. Not until the collapse of communism and the fall of the Berlin Wall in Germany at the end of the 1980s did citizens of the GDR get a new lease of life. Suddenly, everything was supposed to be available in abundance, for sale anytime and anywhere. In many sectors, even more was produced than could be consumed by its expiration date, and market prices plummeted. As a result, the values of thrift, stockpiling and repairing, instead of buying new things were increasingly abandoned - virtues and behaviors that, at least in the middle of the last century, were still wholeheartedly embraced throughout Western Europe.

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When module and BOS prices are high, new installations become less profitable and the focus shifts back to renovating and optimizing existing systems. Although there are signs that the upward price spiral is slowly winding down, there is still no evidence that prices are stabilizing or falling. As already predicted, a few remaining stocks of new modules - some of them quite large - have come onto the European market over the past few weeks. However, that these were quickly snapped up by the big system houses and others wanting to restock their warehouses to be on the safe side for the next quarter. Although module prices are unlikely to rise any further for the time being, the major manufacturers' production facilities are already fully booked for months, which means that there is no short-term capacity for new orders.

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The title of my market commentary in October was "Module prices set to rocket back to 2019 levels". Well, today prices have already reached December 2018 levels and there is no reversal in sight. Prices for all module technologies have once again risen by an average of 3 percentage points since last month. Even the few lower-capacity products still available - i.e. below 300 watts for 60/120 cells or 400 watts for 72/144 cells – are now being traded at rates that are only acceptable in the most dire of circumstances. Given high historical feed-in tariffs, such terms are only tolerable for replacement of defective modules in existing plants. In new plants, panels with such low efficiencies – referred to here as mainstream modules – are scarcely viable for economic reasons. more ...
First, the bad news: PV panels will also be caught up in global inflation. After a very brief respite, prices are picking up again for almost all module technologies. But the changes recorded for early October are paltry compared to the price increases still to come. As of the cutoff date for this market survey, some manufacturers had already announced even more significant upward corrections for future deliveries. more ...