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.

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.

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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.

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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.

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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.

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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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