In view of the current module pricing, PVmen interviewed four of the top 5 module manufacturers in China, using Company A, B, C and D to represent them in the following context.
Heated demand continues
Compared with common multi-crystalline modules, it seems that the mono-crystalline, especially mono PERC prices are still high, with a further upward trend. “Currently the mono cells are almost out of stock in the market, resulting in the short supply of mono modules,” says the Head of Sales at Company A.
With the launch of the PV Top Runners project, the market recognition and demand for high-efficiency modules is gradually increasing. In addition to the projects in the Top Runner bases, some ground-mounted power stations are also starting to shift part of their demand to high-efficiency modules. The Head of Sales at Company B explains, “Firstly, the high tension of land supply forces project owners to purchase high efficiency mono modules to meet their rated capacity requirements; secondly, some customers have benefited from the trial use of high-efficiency mono modules in terms of system cost and IRR, hence their recognition of such products is growing.”
The current market price for mono PERC is around RMB 3.4 (US$0.49)/Watt, and despite the price increase, the products are still in short supply. The Sales Head at Company C expects that the price for mono PERC will remain at roughly this level until the end of next September, unless the price of silicon drops.
He also confirms the short supply of mono PERC, stating that 2 mono PERC manufacturers each have a monthly production capacity of 100 MW, and the other two each have 50-60 MW output per month. Counting all these capacities, the annual output is close to 4 GW, whereas demand from the Top Runners is around 5.5 GW. However, the current high price does not mean that these companies can become significantly profitable. Owing to the restriction of electricity prices, these module manufacturers are still having a hard time.
One developer from the top 10 winners of the 2nd batch of the PV Top Runner Project says that high-efficiency module procurement has become a headache to the company. Though it cannot be described as merely “nominal price”, the continually rising prices caused by factors like bidding, obviously upsets the company.
The bulk of construction for the 2nd batch of the 5.5 GW Top Runner projects will start from April 2017. Though the major module manufacturers are expanding their high-efficiency production capacity, the current high-efficiency mono modules are still in short supply. The price increase caused by such short supply will continue to remain, and might become even more serious in Q1 2017 as the construction period is approaches.
The Top Runner Project’s drive of high-efficiency products is not concerning the domestic market; according to Company B. The survey shows that the effect has been extended to other overseas markets like U.S. As a result, the high price trend caused by the short supply will probably continue.
Common module prices have peaked and will fall soon
According to a report by Taiwanese market research firm EnergyTrend, “with the completion of some solar systems that must be grid-connected before year end, the demand in the solar supply chain has been gradually satisfied. The order on multi products from the middle & upper streams lasting for one and a half months has slightly cooled down. Multi-crystalline wafer and cell prices are expected to decline slightly very soon. ”
Company D reveals that, for multi-crystalline modules, the prices locked with 2017 orders have begun to decline, however, prices for immediate delivery orders are still strong.
The Head of Sales at Company B believes that, if there is no big fluctuation in silicon material prices, module prices maintaining at RMB 3.2 (US$0.46)/W is relatively rational. In fact, the price fluctuation of the top 5 module manufactures is not as sharp as expected. Even during the market downturn in H2 2016, their prices are generally flat, with little fluctuation. Cases like the panic dumping of goods, resulting in prices tumbling, usually appears in Tier 2 or 3 module manufacturers. Apart from that, some companies also face the challenge of profit instability caused by the outsourced cells.
The fluctuation of module prices is influenced by many factors from upstream and downstream businesses. Behind the market prices that are dependant upon supply and demand, we usually see a dramatic profit shrink, or even a loss to the manufacturers. As a result, the investigation and study targeting the benchmark power price adjustment shall be carried out based on the actual market situations, addressing the specific issues case by case.
Article reproduced with permission from PVmen. Edited by Mark Hutchins.