What does it have to do with the price of PV in China?

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U.S. effects of the global module downturn

How U.S. companies view the global collapse in PV module prices depends on what segment they are in. For developers, EPCs, and suppliers of components other than modules – the vast majority of U.S. players – this is a welcome reprieve from the higher prices caused by the Section 201 tariffs. But for U.S. module makers, like their counterparts in other nations, this spells trouble.

While GTM Research says that it does not expect this to fully offset the impact of Section 201 import duties, it has increased its forecast for the U.S. market upward in the wake of price declines. Cheaper modules are cheaper modules, tariffs or no, and Tony Clifford, Chief Development Officer at Standard Solar, says that his company is looking at deals in markets where the economics were previously marginal.

This is part of a bigger trend, and pv magazine USA has also reported several projects larger than 100 MW DC in previously underdeveloped states including Ohio, Maine, and Wyoming in recent months. Upstream the impact is very different. The first thing that happened is that First Solar’s stock dropped 22%, from $68 per share at the end of May to $53 per share a week later.

Like the other companies setting up U.S. manufacturing, First Solar has indicated that it is proceeding with its new Ohio factory, price declines or no. While First Solar’s Series 6 is too new to prove manufacturing cost estimates, the company’s projections indicate that it can make its large format product very cheaply. This means that it could cut prices significantly and still retain positive margins.

Regardless, First Solar will still see more competition in the utility-scale market, which is the most price-sensitive. And as prices haven’t stopped falling, we don’t know what that will mean. For SunPower, concerns are different. SunPower’s high-efficiency IBC modules sell into the premium residential and commercial and industrial markets, which are less price-sensitive. However, the same cannot be said for its P-Series, or the products at the SolarWorld factory in Oregon which SunPower is in the process of buying.

While SunPower has not given any indication that it will back out of this deal, anything could happen. Other current and new U.S. module makers face similar concerns, and we at pv magazine consider the roughly 2 GW of module factories still in the planning stages to be at risk.

Christian Roselund

Strong upswing in the European markets from dropping module prices

In Europe, PV installation growth across all the segments, from residential to utility-scale, will directly benefit from the anticipated decline in global module prices, Josefin Berg, IHS Markit’s Research and Analysis Manager reports. “We therefore project a strong upswing in the fourth quarter this year across all major markets.” This is something Bloomberg NEF also anticipates. “We heard of several project developers postponing and renegotiating their contracts as their expectation is for module prices to fall. We heard of developers locking into $0.27/W module contracts for delivery in Q3 and Q4 in India and the EU even before the policy headwinds in China,” says solar analyst, Pietro Radoia. As such, the last quarter of 2018 could turn out to be a “hot market” in terms of contract negotiations.

Berg went on to say that many developers have also been waiting with procurement until after more certainty is given on the minimum import price (MIP) issue in Europe – currently set to expire on September 3 – “so there is held back demand,” she says. “Installations in Europe could reach as much as 12 GW this year, the highest number since 2012,” she adds.

Overall, Berg does not anticipate much of an impact from the MIP. “As also modules from outside China will be sold at lower prices, we do not see much of an impact of the MIP at the moment. A removal of the MIP would mainly shift the origin of the modules. The near-term pricing of Southeast Asian modules is likely to be sufficiently low to create a near-term upswing in demand even if the MIP is kept.”

TrendForce, however, recently outlined two scenarios it foresees, depending on whether or not the MIPs remain in place. If they expire, Chinese exporters will again concentrate on the EU market. Under this scenario, competition would be intensified, it says, thus driving down module prices, and potentially stimulating growth of non-subsidy PV projects. “Taiwanese and Malaysian suppliers,” meanwhile, “will face competition from Chinese counterparts in Europe and from third-party suppliers in India.” If they are extended, third-party suppliers would ship to both locations, and “pose strong competition to Chinese suppliers in India,” it continues.

Becky Beetz

 

The 6 MW dual-axis tracker project in Alessandria, Piedmont Region in Northern Italy.
Photo: Econergy

Lower module pricing will bolster PV deployment in India

IHS Markit’s Berg believes, the oversupply of modules on the global market, resulting from the latest regulatory intervention in China, is creating a better environment for developers and EPC contractors, and will likely bolster India’s PV deployment this year. And it couldn’t have come at a better time.

“The overhanging concern about future trade barriers could also lead to an additional rush to import modules to the Indian market later this year,” Berg says. “PV module prices have already fallen by 20% in the last six months. The price fall is great news particularly for those Indian developers who won projects at record low tariffs last year.” Indeed, she says many of these projects, which were looking unviable until recently, have now become viable and seem financially attractive.

“On the whole, the timing is very favorable for the entire Indian market, as the government is looking to scale up the sector. More than 25,000 MW of tenders are currently awaiting auction and tariffs are expected to fall further,” adds Vinay Rustagi, Managing Director of Bridge to India.

Anmol Jaggi, Director at Gensol Group, sees the 20% reduction in module prices as benefiting the independent power producers (IPPs), as it is a golden time to book modules and lock in margins.

“However, module prices shall start to strengthen around October, and also the reduction has created an opportunity for the Indian government to impose safeguard duty,” he adds. “Imposition of safeguard duty currently would not lead to a tariff increase as well, as the government can demonstrate its commitment to domestic manufacturing.”

Uma Gupta

 

The Netaji Subhash Chandra Bose International Airport in Kolkata, West Bengal hosts a 2 MW project.
Photo: Vikram Solar

Falling module prices – a push for the off-grid solar sector?

PV module prices have fallen by more than 10% during the last 12 months. In the off-grid sector, the most promising areas are the commercial and industrial (C&I) segment as well as minigrids for rural electrification. Minigrids for rural electrification typically consist of a rather small PV array, storage, the distribution infrastructure, and sometimes also diesel or biomass generators. Especially for villages that are newly electrified, project development contributes significantly to the overall costs.

The current boom is not based on PV module prices, but rather on progress regarding finance. In the C&I segment, the plant sizes are significantly larger, no distribution infrastructure is needed, and the project development costs are proportionally lower than for minigrids. PV modules make up a higher percentage of the overall costs. Many C&I projects that have been realized lately take advantage of falling PV module prices.

More important, however, are recent diesel price increases. The gap between solar and diesel power generation costs has been widening which has led to many new off-grid solar-diesel hybrid projects in the C&I sector that replace expensive on-site diesel power generation by cheaper solar electricity.

Thomas Hillig

 

he supplier of off-grid solar solutions, Mobisol, powers homes and businesses, like this tailor shop in East-Africa.
Photo: Mobisol

Price drop could mean that solar PV goes below wholesale in Oz

The solar market Down Under has never been in such robust health. Across all segments, 2018 is shaping to be a milestone year.

The APVI Solar in Australia report tallies the expansion: from 114 MW grid-connected in 2017, to 1.4 GW in H1 2018 and an additional 1.9 GW currently under construction. Beyond 2018, there is a huge 35 GW of solar projects at various stages of development. But what could a potential 20-30% reduction in module prices mean?

“This sort of price drop could potentially push EPC prices towards
AU$1/watt DC, all else equal,” answers Rystad Energy analyst Ben Willacy. “This in turn could drive break-even prices below AU$60/MWh, depending on the rate of return targeted by project owners. Such a decrease would place large-scale PV below wholesale electricity future prices in much of Australia,” Willacy notes. “Commercial and industrial electricity users are particularly likely to take note of this, as an increasing number of businesses are entering into renewable energy PPAs to reduce and lock in energy costs.”

Promising as it is, Australian electricity market structures do not make it automatic that a very large number of PV power plants will be developed purely on a merchant basis – unless their investors and lenders are willing to take significant risks. Wholesale electricity prices are falling, and the large pipeline of renewable projects coming online seem likely to lead to a continuation of that trend.

On the rooftop, Rystad’s Willacy sees the potential that significant module price declines could further turbo-charge the segment – which is achieving a monthly sub-100 kW run rate of close to 120 MW. “The residential market is highly competitive, with prices for rooftop systems coming down rapidly,” says Willacy. “Falling panel prices will certainly provide a further boost, particularly if residential electricity tariffs remain sticky and an increasing number of consumers seek to mitigate their energy costs.

Jonathan Gifford

The 60 MW Gannawarra Solar Farm was grid-connected in April. It will be coupled with
a 25 MW/50 MWh battery.
Photo: Wirsol