Solar Industry Prices May Be Coming Down Sharply

According to a chief solar analyst as iSuppli Corp., the solar industry is facing a permanent ratcheting down of price structures that will change the face of the industry. While predicting a strong rebound in demand for solar panels this year, with a 64% increase in installed watts, PV faces such steep price declines that companies will need to accelerate their cost-reduction programs, said Henning Wicht, senior director and principal analyst for photovoltaic systems at iSuppli.

While iSuppli expects overall demand to increase sharply, that picture is clouded by expectations that the feed-in tariff subsidy in Germany, which accounts for roughly half the world market now, will be cut in the middle of this year.

Changes are underway on the supply side as well. Two South Korean giants, Samsung and LG Electronics, are expanding their solar-related operations, as are Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC, Hsinchu, Taiwan) and U.S. engineering giant Bechtel.

The iSuppli analyst said global installed watts for PV systems will grow by 64% in 2010, reaching 8.3 GW, a return to growth levels seen before the fall of 2008. However, the industry will see a continuation of the “tremendous price erosion” that began last year.

On average, iSuppli said crystalline module prices last year fell by 37.8%, solar wafer prices plunged by half, and polysilicon prices crashed, dropping 80%. Price drops will continue this year at a slower rate, with crystalline module prices expected to drop by 20%, wafer prices by 18.2% and polysilicon prices by 56.3%. iSuppli also is projecting that prices, on average, will recover by 10% or more in the final quarter of 2010, despite the declines for the entire year.

iSuppli is predicting crystalline module prices will drop by 20% this year. (Source: iSuppli)

www.isuppli.com