CRU/Exawatt, an independent market intelligence firm, provided a comprehensive overview of the current PV cost, price, and technology outlook at the recent TaiyangNews conference
According to Exawatt, the ongoing price drop across the PV value chain squeezed manufacturers' margins, as the reduction in selling prices outpaced the decline in overall manufacturing costs
Exawatt noted that achieving major manufacturing cost reductions over the next few years may be difficult due to multiple potential headwinds
Its bottom-up cost modeling predicts that with wafer and cell prices at such low levels, non-integrated module manufacturing costs have the greatest potential for a short-term rebound
The ongoing trend of unsustainably low prices across the PV value chain - spanning polysilicon, wafers, cells, and modules, sometimes even falling below cash costs - has raised several critical questions in the market by the end of 2024. Key concerns include the underlying causes, the expected duration of this unsustainable trend, and the short-term and medium-term market outlook across the PV value chain.
During the keynote presentation at the recent TaiyangNews annual flagship event High-Efficiency Solar Technologies 2024, Alex Barrows, head of PV at CRU/Exawatt, an independent market intelligence firm, provided a comprehensive overview of the current PV cost, price, and technology outlook (see Exawatt presentation here). Exawatt, now part of the CRU group - a provider of market intelligence and consulting across industries such as metals, mining, solar, and batteries - offers a range of services, including subscription-based offerings, one-off reports, and consulting projects.
Trends & Projections
Barrows began his presentation with a graphical representation of the exceptionally low spot prices throughout the PV value chain, from polysilicon to modules, over the past 18 months. This rock-bottom price trend, primarily driven by the sharp decline in polysilicon prices, subsequently reduced manufacturing costs for wafers, cells, and modules. However, this price drop squeezed manufacturers' margins, as the reduction in selling prices outpaced the decline in overall manufacturing costs. Exawatt highlighted that the recent stability in spot prices, which have remained at these low levels for the past few months, has posed significant challenges to manufacturers. Both large and small producers have canceled or postponed capacity expansion plans, smaller manufacturers have gone out of business, and existing overcapacity is not expected to be resolved quickly.
This unsustainable trend of average selling prices (ASPs) falling below cash costs across the value chain – spanning wafers, cells, and modules – by Q3 2024 underscores the need for either a price rebound or further cost reductions to make ongoing pricing profitable again. Exawatt also noted that achieving major manufacturing cost reductions over the next few years may be difficult due to multiple potential headwinds.
A review of the historical trend of Daqo’s polysilicon manufacturing costs and ASPs between 2017 and Q3 2024 revealed that prices ($/kg) have fallen below cash costs by the end of 2024. Between 2021 and 2023, however, a price surge resulted in considerable profits for some polysilicon producers, allowing them to survive for an extended period while selling slightly below cash costs. New entrants in polysilicon production, however, face much greater challenges, noted Barrows. For example, one unnamed manufacturer has yet to activate its new polysilicon unit due to the ongoing price trends. Despite numerous casualties in the market, including bankruptcies, restructurings, widespread cancellations and postponements of capacity expansion plans, and cross-industry manufacturers exiting the PV sector, the impact on planned capacity levels for 2025 and 2026 has been limited. Exawatt predicts that by 2026, the market will reach 1.6 TW for wafers, 2.3 TW for cells, and 2.2 TW for modules, while the installation forecast is between 650 GW and 770 GW. The company further predicted that more challenges lie ahead – whether due to voluntary production cuts or manufacturers being forced to operate at a loss – before the market returns to normal.
CRU’s Bottom-Up Cost Modeling
CRU’s bottom-up cost modeling for ingot, wafer, cell, and module manufacturing evaluates all costs involved in producing these products – materials, consumables, labor, electricity, and depreciation. The modeling reveals that material costs are the primary driver of manufacturing expenses for integrated manufacturers, accounting for up to 75% of total costs. This underscores the importance of understanding the factors that influence cost reductions in the industry. Additionally, the modeling highlights that other key metrics, such as labor, electricity, and depreciation, account for a smaller portion of the overall cost structure.
Exawatt also analyzed potential headwinds from aluminum and silver prices. For silver, it anticipates gradual, sustained upward pressure over the next 5 years, while rising aluminum prices are expected to increase frame costs. Other potential headwinds include higher solar glass prices and exchange rate fluctuations, which could push $/W or c/W prices higher for the same manufacturing cost in China.
The forecast for Chinese module production costs (or module COGS) for dual-glass TOPCon modules suggests that integrated module manufacturing costs will remain flat or increase modestly in 2025 and 2026. However, with wafer and cell prices at such low levels, non-integrated module manufacturing costs have the greatest potential for a short-term rebound, according to the company.
Technology Outlook
Regarding the module technology outlook, Exawatt expects TOPCon to dominate in the near term. The next major shift in module technology commercialization is expected to be toward XBC or tandem designs. However, there may be a future coexistence of back-contact and both-sides-contacted designs for all-TOPCon cells.