DBRS Publishes Commentary on the Development of Solar PV Module Prices

DBRS Limited (DBRS) published the commentary “Sun & Sand: The Development of Solar PV Module Prices.”

This commentary examines the development of PV module prices over the past decade. Solar photovoltaic (PV) electricity generation has had tremendous growth for more than a decade, underpinned by a surge in renewable energy programs and government support. One of the main long-term trends has been a drop in PV module prices.

The significant increase in demand for solar PV coupled with a polysilicon shortage resulted in a supply crunch across the PV value chain by the mid-2000s. This prompted significant investment into building capacity along the upstream PV solar value chain. Since then, increasing manufacturing capacity, coupled with technological improvements such as enhanced efficiency, has resulted in a significant decline in the price of solar PV modules, with the price per watt declining by more than 60% since 2011.

The long-term trend of continued decline in solar PV module prices has been the main driver behind the drop in the cost of solar PV electricity. Recently, however, certain factors are contributing to a short-term increase in module prices. China, the largest consumer and producer of solar PV modules, has somewhat unexpectedly increased its renewable energy targets. In the United States, an anti-dumping petition by a PV module manufacturer is causing uncertainty in the industry and has put upward pressure on prices. DBRS expects these factors to only cause a temporary price uptick. As in previous price cycles, the following factors will continue to play a dominant role and contribute to the continued decline of solar PV module prices in the next three to five years: (1) supply and demand dynamics, (2) technological developments and (3) industry consolidation and continued incentives for solar project development.

DBRS anticipates that prices will continue to decline in the medium term, albeit at a slower rate, on the back of substantial manufacturing overcapacity and continued research and development (R&D) spending across the value chain. R&D spending is expected to accelerate as a result of more funding made available by larger industry players as well as the continuation of manufacturing incentives.

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A full copy of this commentary is available by contacting us at info@dbrs.com.

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