The Solar PV Supply Chain

Price Decrease and Consolidation (Homepage), by Edwin Koot, Founder & Chief Executive Officer of

The solar energy market and industry have been experiencing a price decrease in solar modules since the second half of 2006. More and more companies are offering large quantities of modules — and it seems as if the acute module shortage which was limiting project development has vanished. Is this just a temporary development, or could this be the start of continued price decreases? Let’s look at three major trends in the market and their possible implications.

It seems the semiconductor industry has found a way to make better profits by moving to solar wafer and cell production. From this perspective it is no coincidence the semiconductor nation of Taiwan already has seven solar cell manufacturers. So, with more cells and modules — and fewer sales in Germany — where do all the modules go?

Considerably lower sales in Germany: The German market will consume considerably fewer modules in 2006 compared to last year. Precise figures are still not available, but everybody within this market is convinced.

The feed-in tariff decreased 5% at the start of this year. At the same time the module shortage was moving toward its peak. Basic financial calculations showed that PV installations and, moreover the larger free-field power plants, were no longer as attractive as they were in 2005.

Simply count the new large projects inaugurated in Germany in 2006: fewer large power plants means significantly fewer megawatts (MW). With Germany being the world’s largest market, a drop of 10-15% in module sales means some 100-150 MW of modules can be sold elsewhere, and the predictions that can be heard within this market are: sales of 600 MW or even less in 2006 instead of the 730 or more in 2005. (Read the whole long article on Renewable Energy Access, Nov. 27, 2006).

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