Have Solar Prices Hit Rock Bottom?

Moving forward, the answer to that question is likely to impact the pace of adoption. For the past decade the solar industry has enjoyed two critical dynamics: rapidly declining prices and an historically low cost of capital.

The era of zero interest rates is over. Despite the cost of money remaining at historically low levels, it doesn’t feel like that to the solar industry. Now, the era of rapid price declines may also be ending. Together these changes will make further solar adoptions more challenging.

Predicting the future can never be done with certainty. However, when it comes to solar panel pricing there is probably no better opinion than that of the heads of the two largest Chinese PV manufacturers in the world. That would be the CEOs of TrinaSolar – Gao Jifan, and the CEO of JinkoSolar – Li Xiande.

At a recent Shanghai Stock Exchange presentation both men took the position that the recent “irrational” decline in prices is unlikely to continue. That isn’t exactly news since no product can sustain open-ended price declines. 

Gao stated, “The prices of photovoltaic modules is currently at a low level, and there is limited room for further decline. In the future, as the demand in the PV industry increases, the supply and demand relationship is expected to gradually improve,” he said.

Translation: as demand remains robust or increases, expect prices to either stay at present levels or potentially increase.

Li commented by saying, “At present, the prices of the industrial chain in the domestic market are already at a low level, and the entire industry is under profit pressure. In terms of cost, it is less likely that industrial chain prices will continue to fall irrationally.”

Translation: Our margins suck, and we’d like to change that.

Price stabilizing doesn’t mean that overall product value will stabilize or decline. New technologies and higher efficient panels could yield better price performance for consumers even at higher prices. Thus, the industry should shift from expecting further price erosion to seeking a higher value proposition from advanced technology such as n-type tunnel oxide passivated contact (TOPCon) and heterojunction technology (HJT).

TOPCon and HJT promise higher efficiency and longer life spans but face cost challenges that stem from a more complex production process. That challenge could describe almost any leading-edge technology.

Although currently, these technologies are viewed more as a “luxury” offering, the goal is to achieve general price parity with lower technology products and ultimately offer the market better price performance and lower overall cost of ownership. How quickly the industry can achieve those advancements will factor into future growth projections.

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