Solar module prices may fall 20% this year
Global prices of solar modules, a key component in setting up solar power plants, could fall by as much as one-fifth this year, said companies and analysts. That will come as a shot in the arm for Indian producers of solar power and could increase the financial viability of projects.
India has a target of setting up 100 GW of solar and 60GW of wind energy by 2022. The country’s installed solar power has already crossed 9GW as on December and is likely to double to 18GW in 2017 as large projects get commissioned.
Modules make up for nearly 60% of a solar project’s total cost and their prices have fallen by about 26% in 2016 alone, benefitting new and under-construction solar projects in India despite record-low tariffs from aggressive bidding. In a February reverse auction, rates touched a record low of ₹2.97 per kilowatt hour.
“Prices are likely to continue to fall and in the second half of this year; tier 1 module prices are likely to be between 27-30 cents (per watt peak),” said Sanjeev Aggarwal, managing director and chief executive of solar energy firm Amplus Energy Solutions Pvt. Ltd.
Solar modules are ranked as tier-1, tier-2, tier-3, and tier-4, with the first representing the highest quality modules from the top 2% of the manufacturers. Global companies including Canadian Solar, Jinko Solar, First Solar, Trina Solar, and India’s Vikram Solar are among the large tier 1 module manufacturers.
Costs of solar photovoltaic (PV) modules are falling because of oversupply in China, where rising demand has been outpaced by the rush to add capacity. While China reported solar installations of about 34 gigawatt (GW) in 2016, it is only likely to add about 28 GW in 2017 – putting downward pressure on prices, Bridge to India said in a report last week.
Module prices for tier 1 manufacturers currently are around 31-32 cents per watt peak (Wp) and likely to fall April onwards, when demand typically starts slowing in China, said Vinay Rustagi, MD of Bridge to India.
“Global demand is expected to be nearly stagnant in 2017 even as several large suppliers have announced significant expansions; we believe that 2017 is likely to end with prices in the range of US¢ 25-26/Wp,” the report said. A reduction in module price “would bolster demand and ease financial concerns of developers and lenders.”
There is an oversupply situation and “prices are likely to continue to fall in 2017,” said Aditya Goel, executive director at Ornate Solar, an authorised distributor of Canadian Solar Inc’s modules in India.
Others, however, aren’t so optimistic.
“Global data on Solar PV module suggests that module prices have continued their downward trend in January and February 2017. While prices in China have fallen 11%-13%, those in SouthEast Asia and Taiwan are down 17%-20%; but it is difficult to infer that this magnitude of fall may continue,” said Deepak Agrawala, analyst, Elara Securities.