GTM Research held a webinar, “Where Will PV Module Costs Bottom Out?” on Aug. 22 that discussed how low the costs of silicon-based photovoltaics (PV) will go by 2017, looking at the Chinese PV manufacturing market. The company is forecasting a base case scenario where Chinese PV modules cost 36 cents per watt to produce in 2017, down from 50 cents per watt at the end of 2012. The webinar focused on China because it is the world’s largest PV producer.
“This is just the economics of building a module,” explained GTM Research Senior Analyst Shyam Mehta. It doesn’t directly reflect the price of solar panels, wholesale or retail. But it does give an idea of where such prices are going.
The webinar was based on Mehta’s report, PV Technology and Cost Outlook, 2013-2017. While that may sound like a steep price drop, it’s much less than in the past. For instance, in the last quarter of 2011, Chinese PV modules cost about 85 cents per watt to manufacture. By the end of 2012, they had fallen to 50 cents per watt. During that period the cost of polysilicon and other components dropped by 64 percent, Mehta said.
“The other factors include increased conversion efficiency, increases in manufacturing and higher yield, and then also in the case of some manufacturers in China, they've moved upstream and gotten involved in the manufacturing of these non-silicon consumables themselves, like frames and wires,” Mehta said. He alluded to Jinko Solar, which now manufactures its own frames, helping to further reduce costs.
While there’s been a lot of talk about technology, Mehta said, it hasn’t had much of an impact on Chinese PV manufacturing costs. Neither has scaling up production.
“The kind of historical reductions we've seen in the last few years, I don't think they'll be sustainable going forward,” Mehta said. While he anticipated that costs will continue to fall, GTM Research anticipated a lower rate of pricing decline. “In terms of decline, it's a compound annual decline from to 2017 of 6.3 percent in total, he said. That’s much less than the 20 percent decline from the last quarter of 2011.
GTM Research anticipates that the main driver of price decreases will be related to labor in China. Mehta said there’s a 10 percent annual increase in labor. “This increase in labor and the new capital spending environment in 2014 and 2015 timeline is going to force Chinese companies to invest much more capital in automation, to reduce the labor intensity and labor cost,” he said.