Our initial assumption heading into 2024 was that the prices for Chinese solar panels (also cells, wafers, polysilicon, and so on) would fall to the marginal cost of production, with production capacity growing to 1,100 GW and demand growing to ‘only’ between 500 GW and 600 GW (up between 25% and 50% from 2023, and more than double than 2022 figure).
The price of solar modules has trended, broadly speaking, from $240 per kW in 2020, to $280 in 2021 and 2022 during the polysilicon shortage, then $210 in 2023 as the shortage eased, and has fallen to around $110 per kW this year.
And for a brief moment, prices did fall to what we believe was, more or less, the cost of production. At the time, commentary had already begun about below-cost Chinese dumping, which we rejected as sour grapes from Western competitors. Then prices kept falling, as part of a trend that’s common across all Chinese green energy equipment manufacturing, or indeed the entire Chinese economy, which is experiencing price deflation.
Now that it’s late September, prices have been stable at very low levels for most of the year – and H1 financial results have been published by the big manufacturers, allowing us to take a stab at deriving manufacturing costs.
To isolate one segment, we see TCL Zhonghuan shipping 62 GW of wafers in H1 2024, with a loss of $137 million on its wafers, a loss of $2.2 per kW. Annoyingly, wafer prices (currently stuck at $0.24 per unit) are reported per wafer rather than per Watt, but at 22.5% efficiency and 210mm square wafer size, we can calculate each wafer as 10 Watts, meaning the wafer price is $24 per KW, down from $41, and with an average value of $33.7 per kW in H1 2024. So TCL’s production cost can be estimated at $36 per kW, meaning the current price is just two-thirds of production cost! This also fits with two-thirds of TCL’s overall $451 million losses in H1 being incurred in Q2 specifically – as prices declined further.
Assuming that this negative margin can be assumed to hold for other segments, which is what a cursory examination of the numbers indicates, then the price of making a solar module maybe still be as high as $140 per kW, even though our price tracking has them selling at below $110 per kW – or as low as $88 per kW in some large-scale procurements. No doubt the cost will continue to decline as it always has, to $120 per kW say in the not so distant future – but the price also has to climb, even if it can only climb very slightly until outright bankruptcies start mothballing swathes of production capacity.
And that assumption is reasonable – see solar-grade 3.2mm glass prices declining by 20% to $3 per square meter, when the only change has been the massive overcapacity, Chinese deflation, and the accumulation of inventory. Prices were already little more than cost – then they fell 15%, with no technical change nor change to the cost of energy that goes into making it. Prior to this fall, the price of solar glass had been static for an entire decade, with its post-pandemic spike being relatively small and brief.
Negative margins, of anywhere from 10% to 40%, very likely apply not just to every solar supply chain element but to every other Chinese green energy industry – see the China Automobile Dealers Association reporting a collective $19.6 billion loss in H1 2024 caused by price wars.
The biggest solar manufacturer is LONGi, and it has posted the biggest loss, of $740 million – compare to profits of $922 million in H1 2022, and $1.3 billion in H1 2023, off a smaller scale of shipments. A similar story can be observed with the other solar giants. LONGi had some mistakes particular to it, such as lowering its wafer prices too soon when the polysilicon price fell, resulting in massive inventory depreciation losses accounting for most of its total loss figure – and running afoul of reshipments from the US.
LONGi has also pursued a heterojunction and xBC cell type strategy as it verticalizes beyond wafer and module – but TOPCon has so far come out on top for cost-effectiveness and has dominated the industry in the past couple of years as the main replacement for Mono PERC. That put it second in the list of loss-makers on the entire of 5,300 companies on the Shanghai, Shenzhen and Beijing stock exchanges. The third place was a lithium supplier, and the other three in the top 5 Chinese loss-makers were all in real estate.
In other solar news
The lowest price seen for solar modules so far is now just $88 per kW, at a large-scale procurement held by Huadian Group in China. The average price was just under $100 for this procurement.
China’s electricity consumption came to 965 TWh, up 8.9% from August 2023, with a 23.7% increase in the residential category and only a 4% increase in the secondary industry category, which accounted for 567.9 TWh. So far this year secondary industry is up 6.3% and residential up 10.9%.
China has installed 140.9 GW of new solar power this year, as of August, indicating that full-year installations will exceed the previous year’s figure of 217 GW. In August alone, 3.88 GW of solar was built in Shandong Province’s commercial and industrial (C&I) rooftop segment.
Construction has begun at a 263 MW solar farm in the Buka district of Tashkent, Uzbekistan’s capital.
The price of high-purity quartz used in Czochralski process crucibles which solar-grade monosilicon ingots are grown in has fallen to $10,000 per ton for Chinese-made inner-grade, while middle-grade is $5,000 and outer-grade is $3,500, while a 36-inch crucible costs $1,400 each. These prices are down one-third from June, and come from the Silicon Industry Branch.
The Interstate Renewable Energy Council (IREC) reports that the US added 15,564 jobs in the solar sector in 2023, reaching 280,000 total. Jobs in the solar sector already passed the 250,000 mark in 2016, then stalled for eight years.
Better Energy has delayed its 3 GW solar portfolio planned for sites across Denmark until after 2030, citing weak demand.
rPlus Energies has broken ground on the Green River Energy Center which features 400 MW solar and 400 MW 4-hour energy storage.
The EU has launched the Laperitivo project to support the manufacturing of large-area perovskite modules with 22%, or 20% and 95%-bifacial.
Trina Solar has submitted a planning application for a 660 MW / 2,640 MWh battery energy storage system in Wellesley, Western Australia, called Kemerton BESS, with a $300 million proposed investment.
Utmolight has announced it will develop a 1 GW perovskite solar module factory in Heze City, Shandong Province, China, with a $210 million investment.
A 100 MW perovskite solar cell factory has been announced by Li Yuan New Energy Technology in Jiangyin, China, with a $28 million investment, a module size of 1200x600mm, and (we assume) the same single-junction product choice which has been made by most Chinese perovskite companies, especially the smaller ones.
A 1.1 GW desertification control solar farm has been approved for Tongliao, Inner Mongolia, China.
Indian manufacturer Gautam Solar will invest $119 million in a 2 GW cell factory in the country.