Since the beginning of the year, the solar market seems to have settled back to “normal” prices, as government subsidies and other policy supports have been gradually phased out.
However, despite the leveling off of government support, there are still significant variations in prices from one region to another. This is mainly due to a large number of large-scale projects that are currently in some stage of construction. As a result, there is abundant supply and, consequently, downward pressure on prices. This scenario is likely to continue until late 2019 at the earliest.
GTM Research’s Takeaway
GTM Research recently published a special report exploring the current state of the solar market. According to the research, while the price of solar energy has declined by 23% since the beginning of the year, it remains substantially higher than before the pandemic.
Nevertheless, the report notes that the situation is not as bleak as it may seem. Specifically, it identifies several cost-reducing measures that have the potential to bring solar power within the reach of more households. These measures include increased efficiencies and reduced costs in the manufacturing and installation processes, as well as an overall drop in the price of solar modules.
GTM Research’s price survey explores the changes that have taken place in the price of a standard crystalline silicon solar module since the beginning of the year. To begin with, the report notes that the price dropped by 22% during pandemic times, mainly as a result of reduced demand. Importantly, though, it also points out that prices rose by 9% in other regions outside of North America, mainly because of the introduction of new, more efficient product types (e.g., organic solar cells).
Another important factor driving price variations is the global glut of solar panels. Specifically, the report highlights a 25% fall in the price of polycrystalline silicon cells, due to oversupply and a lack of demand. As a result of this oversupply, manufacturers may be inclined to take advantage of the situation and reduce their prices – or, at least, offer compelling discounts.
Although the price of silicon solar modules has declined overall, the report notes that the cost of installing solar is increasingly becoming a burden for households.
The report recommends a number of cost-reducing measures that have the potential to significantly reduce the burden of installing solar energy. These measures include various state and federal government initiatives, as well as technologies that reduce material costs or increase efficiency.
State and Federal Government Initiatives
One of the main factors driving the down-turn in solar prices is the reduction in cost of government incentives and subsidies. These reductions are mainly a result of the United States federal government gradually phasing out its support program for solar power and other similar measures implemented by various states. However, a number of states have extended their support programs and implemented new measures, offering significant discounts to potential customers.
A critical factor behind the rise in the price of solar modules in recent years has been the increase in material costs. Specifically, the report highlights that the price of solar power has risen by 41% since 2015, even as the costs of solar cells and other materials have decreased.
Looking ahead, the report predicts that further material drops will make the price of solar modules decrease. Specifically, some industry experts predict that solar cell prices may even decline by another 20% over the next year. Moreover, advances in technology such as thin-film solar and efficient module manufacturing may also make a significant contribution to the decline in material costs and, hence, the overall decline in the price of solar power.
Another factor behind the recent surge in the cost of solar modules is their growing efficiency. Specifically, the report notes that the price of solar converters reached a peak of 6.9 cents/kWh in 2017, before declining to 5.7 cents/kWh in 2018 and 2019. Further efficiency improvements in solar modules may result in yet another 25% decline in material costs and, hence, the overall price of solar power over the next year.
The report also highlights that the installation process of solar power is becoming increasingly cost-effective. Specifically, solar power gets cheaper every year as a result of improved technology and more efficient processes. Moreover, certain types of government grants and loans also offer significant reductions for customers.
Overall Price In 2019
Overall, the report concludes that the cost of solar energy is still considerably higher than it was before the pandemic. Nevertheless, it also highlights that this situation is not as bad as it may seem. Most importantly, it points out that the cost of solar energy is now more affordable than residential electricity prices. Accordingly, more and more households are gaining the economic appeal of using solar energy.
This certainly is a positive development for the environment and for our planet, as well as the countless number of people who depend on solar power for their livelihoods. It also presents an opportunity for those interested in investing in solar energy.