As we noted last week, the price of solar modules in the US has already fallen from around 60c/watt to 40c/watt in the last quarter alone, and is expected to fall further to around 35c/watt in the current quarter. Most of this price fall is being attributed to over-capacity.
A new report from Deutsche Bank looking at the Big Six tier 1 solar module manufacturers in China suggests some may struggle through this price war.
Most will have to lower their cost structure much more aggressively than current projections if they are to generate sustainable returns over the next 12-18 months, and will need to aim to slash cash costs to just 26c/watt, rather than the lowest current forecast of 30c/watt.
The report suggests that JinkoSolar and Canadian Solar may be the best placed out of the tier 1 manufacturers, because of their lower cost structure, with Yingli Solar being the most exposed.
None of these (six tier one) Chinese solar companies would generate sustainable cash profits in a 35c/W module price environment, the report says. Cash costs for these companies would have to decline to 26c/W compared to ~30c/W for the lowest cost integrated capacity players.
Deutsche Bank says the blended cost structure of these six tier one suppliers at the end of the June quarter was an average of 41c/W, well above the current spot price in several markets.
Average cost structure of the integrated capacity was 37.6c/W with JinkoSolar and Canadian Solar having the lowest cost and Yingli the highest costs. Companies had talked about bringing integrated costs down to around 33c/W by the end of the fourth quarter.
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