Market Analysis

This month, the module prices have dropped again. The prices for highly efficient modules with efficiencies of over 21 percent fell more than those for modules with lower efficiency. This is mainly due to the now very good availability. Even the otherwise difficult to deliver heterojunction modules from the German-Swiss manufacturer Meyer Burger are currently available from distributors in truckloads from stock. This puts a lot of pressure on sales prices.

The module prices in all technology classes have dropped significantly since the last survey in March. That was sudden, but not unexpected. Here we see a necessary price correction across the board to maintain demand, which recently threatened to slack off. At the beginning of the year, the predominantly Asian module manufacturers announced lower sales prices for newly produced goods. However, it took a good two months for these goods to arrive in Europe. Now, at least on the spot market, there are already offers with prices that are up to 20 percent below last year's values. The availability of most types is also generally given.

Anyone who has followed the solar market for more than a decade is experiencing déjà vu thanks to a shortage of inverters. While small, 10 kW hybrid products typically used with energy storage in small systems are again available, larger, 60 kW to 100 kW units are sufficiently scarce to prompt project developers and engineering, procurement, and construction service providers to desperately comb the market. The European market for large string inverters is virtually exhausted, with no short-term supply in sight. Speaking to inverter market players and project developers, explanations range from conjecture with little factual basis to wild conspiracy theories.

After the module prices have been falling continuously since last November, it seems to have been the last reduction in February 2023. At least from the manufacturer's side, no more price reductions are to be expected for the time being. The reasons given are increased polysilicon costs and expected bottlenecks in other materials. Occasionally there is even talking about the expense of solar panels. At dealer level, however, there is still no sign of this. After prices were initially dominated by sales of goods bought at higher prices last year, there are gradual downward price adjustments in order to remain competitive and to clean up inventories.

Solar module prices have fallen continuously again this month, and there is still no end in sight. The main drivers impacting prices are lower shipping rates from China and the further recovery of the Euro-US Dollar exchange rate. Other effects such as slowly falling energy costs or polysilicon and wafer prices, which are in free fall, will further strengthen the trend in the coming months.

It looked as though 2022 might end on a quiet note, with supply chains and component prices already stabilizing, but December painted a very different picture. In PV modules, at least, there has been a lot of movement. In some cases, discounts on individual products have been very significant - up to 9% since last month. Prices for PV modules, at least for new and grade A products, have dropped nearly to the level they were at some 12 months ago at the start of 2022. Is this the beginning of a long-term trend? We will clarify this and other specialties that can currently be observed below. I spoke to a few key people from the industry beforehand.

Module prices have finally stabilized, and a slight downward trend has even started to set in. Whether this will continue depends mainly on how demand shapes up over the next few months. At the moment, the softening of prices reflects a gradual build-up of inventories, which should be drawn down again by the end of the year, if possible, even if it means further slashing prices. But for the other components of PV systems, the situation is quite different, and there is still no sign of a normalization in supply chains. Many component manufacturers are still facing huge order backlogs that still need to be cleared, so the chaos is likely to drag on into the first few months of the new year. Also, some of the major inverter and storage manufacturers are already announcing price increases again - for the third or fourth time in a row in less than 12 months.

Energy supply stability dominates the political and public discourse these days. Although there is a broad consensus that we have to complete the transformation to a carbon-free energy supply within the next few decades, there is still some debate about how to get there. Solar and wind are thought too erratic to serve as a foundation for 100% supply security. And because electrochemical power storage systems are far too expensive and will never be powerful enough anyway, many still dream of a future built on a hydrogen-based energy system or even a breakthrough in nuclear fusion. But these scenarios are not without their insurmountable hurdles.

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.

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.

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.

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.