Upstream Solar PV Prices Starting To Go Down

• TrendForce expects prices for polysilicon to decline in March 2023 which will have a chain reaction in the following materials of the value chain
• It will bring down module prices which will encourage installations bringing peak season to arrive earlier than previous years
• Yet there remains considerable degree of uncertainty in the PV market in 2023 as price fluctuations in China and government policies may change things

Taiwan based market intelligence firm TrendForce believes polysilicon prices are expected to drop down in March 2023 by around 3.2% month-on-month (MoM) leading to decline in prices for wafers, cells and modules, but warns Chinese PV industry could experience sharp price fluctuations in the short term.

Initially, polysilicon prices started declining in December 2022 prompting major polysilicon suppliers to limit the market supply, leading to increase in prices to the range of RMB 220/kg to RMB 240/kg, before the Chinese Lunar New Year holiday.

With polysilicon makers controlling their supply, wafer suppliers maintained low capacity utilization which tightened its supply in the market and pushed up prices. With polysilicon supply expanding in February 2023, wafer capacity utilization rates too went up and supply eased. Market is expected to bring in large amount of new wafer production capacity this year further declogging supply and lowering prices.

TrendForce says in February 2023, cell prices in China averaged around RMB 1.1/W after temporary hike in prices. These prices will marginally drop by 3.6% MoM in March 2023. As prices in upstream materials decline, cell prices will also return to a more 'reasonable' range.

"Given that suppliers for PV modules are working hard to lower their costs, TrendForce believes the cell section of the PV industry chain will be constrained from pushing prices upward even as its overall production capacity is tighter compared with the other sections of the industry chain," stated analysts.

Drop in prices for the value chain will eventually bring down module prices which will spur demand and installation rates. TrendForce believes the 'peak season for installations is expected to arrive earlier compared with the preceding years'.

Chinese market is likely to experience sharp price fluctuations in the short term with government policies which is likely to impact other major regional markets too, which leads TrendForce to forecast 'considerable degree of uncertainty' in the global PV development in 2023.

According to the firm's estimates, global solar PV installations in 2023 should add up to 351 GW, but it may be impacted by economic slowdown and inflation (see TrendForce Pegs Over 50% Annual Growth In PV In 2023).