Module Price Index August 2018: Greetings from the madhouse…

Graphic: pv magazine/Harald Schütt

Module price index: So ended a recent e-mail from a good friend in the PV industry, a pioneer with over 30 years of experience. It was regarding an exchange about current market developments and the sharp price declines over the past few weeks and months – not a bad analogy!

But the influence on global brand development has never been as great as in this case. All of the forecasts of the past few months have already become obsolete. Instead of predicting a decline in installation figures, the European industry association SolarPower Europe, in its recently published global market outlook, now anticipates a small but very real increase of 3 to 4% in 2018, and 5 to 6% in 2019. Only then will there be a return to healthy growth of 12 to 15% annually, as we have already seen on average over many years. For Europe, however, the forecasts for the coming years are somewhat more ­optimistic, with an average increase of 15%. Within Europe, Germany should again become one of the strongest markets, with an increase of 20%, even without further political support.

Initially, prices for multicrystalline products in particular were expected to continue their precipitous slide due to imminent or current oversupplies. Buyers were hoping for a drop to the €0.25 mark, at least for megawatt-scale volumes. However, the major Asian manufacturers at all levels of the value chain apparently knew how to take quick corrective action. Through artificial shortages, such as production shutdowns, companies are now trying to counteract oversupply and the associated price free fall. Although the effect is not yet immediately apparent, as is evident from the continuing decline in prices, a major crash could probably be prevented in the long term. However, it is doubtful that this strategy will work out in the medium to long term and that prices will stabilize at the current level or just below it.

Europe’s MIP

Module and cell manufacturers with large production capacities in China are waiting for the EU’s minimum import price to be eliminated in September so that they can then offer their modules even more cheaply in Europe. If this actually happens, outlook for the remaining European manufacturers would likely be grim. Their survival would then depend heavily on general market growth, their international business orientation, and strong support from customers. Yet, even if there is a review of the dumping case against Chinese producers and the minimum import prices are kept in place for the next three to six months, it will only be a short reprieve for domestic producers.

I myself expect a general price dip of a maximum of €0.02 per watt peak across all technologies in the fourth quarter. The drop in prices for high-efficiency modules is currently already somewhat more pronounced than for other products, as high performance is itself becoming increasingly “mainstream.”

This is why I raised the lower limit for “high-efficiency” modules to 285 watts peak in May, but these products have become disproportionately cheaper over the course of the year. Nevertheless, the price spread to the mostly multicrystalline “mainstream” modules is still 8 to 10 cents per watt – at the current price level, a difference of 25 to 30%. This price spread cannot actually reflect the difference in the manufacturing costs between monocrystalline or multicrystalline cells, but rather indicates that many modules with lower performance classes are already being sold off close to the production cost to reduce inventories.

Strap on the straitjacket and off into the rubber cell would be the right course of action for some politicians who repeatedly manage to stop generally positive market development through erratic, ill-considered actions and tear down what they have already created.

The best strategy in this roller coaster market is probably to rely on one’s own experience and also a little on one’s own gut. So far, every downturn has been followed by an upturn – usually relatively quickly – because we in the industry have learned to adapt to adversity and make the most of it. In the medium term, the world market for renewables has still grown and system prices have fallen. The motto is to stick to your own vision, and the way ahead is to stay the course in an unsteady market gone mad.

Overview of the price points in July 2018, broken down by technology, including the changes over the previous month

Module class

Price
(€/Wp)

Change over
previous month

Trend since ­January 2018

Description

High efficiency

0.40

-4.8%

-16.7%

Crystalline modules 285 Wp and above with Cello, PERC, HIT, n-type, or back contact cells or combinations thereof

All black

0.42

-4.5%

-10.6%

Module types with black backsheets, black frames, and rated outputs of between 200 and 320 Wp

Mainstream

0.32

-3.0%

-13.5%

Modules with usually 60 cells, standard aluminum frames, white backing, and 260 to 280 Wp – the majority of modules on the market

Low cost

0.22

-8.3%

-15.4%

Reduced-capacity modules, factory seconds, insolvency goods, used modules (crystalline), products with limited or no guarantee

The prices shown reflect the average asking prices for goods cleared through customs on the European spot market, as of 16 July 2018.

Martin Schachinger, pvXchange.com

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