Module Price Index

May 2019: Fridays forever

Since the last reduction in the German feed-in tariff for medium-sized PV systems at the beginning of April, not much has changed in terms of module prices. This is down to unchanged demand in the country – at least in the first days of April. What is more, any local lags in the market are outweighed by steadily rising demand throughout Europe.

Schoolchildren and students all over the world have been taking to the streets on Fridays to protest the inaction of their parents’ and grandparents’ generations. Young people no longer want to accept the frivolous endangerment of their livelihoods on this planet. Facts about the causes and effects of the ongoing destruction of the environment have been known for decades, but beyond high-minded declarations no one has taken decisive action. Carbon emissions and the resulting rise in atmospheric temperatures, the littering of the world’s oceans, the extinction of species – it all continues unabated.

Fridays for Future

What Greta Thunberg began with her “Skolstrejk För Klimatet” in August 2018, which the global public then became aware of after her impressive speech at COP24 in December, has now grown into a massive global movement, which operates under the name “Fridays For Future (FFF).” Even Barack Obama recently praised the young people’s commitment during a visit to Berlin, albeit with a typical appeal to moderation: “When I was a young activist, I always wanted one hundred percent success,” but, he continued, it turned out that this was not possible, and that compromise was the main thing in a democratic and open society.

This may be the right approach, but if the compromise is to be anything other than lazy or minimal, negotiations have to start with radical or outrageous demands. So-called ‘realistic’ demands of one side in combination with egoistic or even inflated demands on the other invariably lead to results with which the other side can often live very comfortably, since in the end it hardly has to make any concessions.

Package of measures

This is the students’ reaction to criticism that their protests lack substance as long as they fail to formulate demands or solutions. A package of measures is now on the table. The starting point is to limit global warming to 1.5 degrees, now a broad consensus. From this, the students deduce that Germany must bring its CO2 emissions to net zero by 2035 and completely shift its energy supply to renewables. The coal phase-out should be completed by 2030. A quarter of the country’s power plants would have to be taken offline this year. In addition, the activists demand all subsidies for fossil fuels be abolished by the end of the year, and all greenhouse gas emissions be taxed at €180 per metric ton.

Of course, there was a prompt outcry from both conservative and liberal parties as well as industry associations. The demands were called unrealistic, there were still no viable alternatives, and Germany’s status as a business location would be endangered – the same old story. But Germany’s future is in danger anyway, if ruling parties and major corporations do not change course, making a rapid switch to low-emission power generation, e-mobility, and other forward-looking technologies in the age of digitalization. Instead, they stir up fear of the economic supremacy of China, a country already more advanced in all these areas and presumably striving for world domination.

In this respect, it is a good thing if we push for more ambitious steps, a whole generation goes on strike until something moves forward. The easy road and conformity were yesterday. The young generation seems to understand that prosperity at the expense of one’s own future is not a real option, and certainly not a desirable one. What conclusions can we “old folks” draw from this?

Well, why not support the protests and put our full weight behind them! Let’s motivate our children and young family members who have not yet become active to join the FFF movement. We can also offer more solutions in the form of new, interesting, and forward-looking business models, products, and approaches.

Greta will certainly not end her school strike yet. A premature abandonment would mean surrender to the incompetence of their parents’ generation and a betrayal of their own future.

Most who have done little or nothing about climate change to date will not experience the most drastic consequences themselves. There is little incentive in our egomaniacal and narcissistic society to move out of our much-loved comfort zone. Our children, however, will suffer terribly, one day wondering if what they learned in school or vocational training will help them to develop adequate survival strategies. Protests are generally still peaceful, but could soon become more radical to attract greater attention and put even more pressure on the public, business, and politicians. School’s out on Friday! Is school out forever?

April 2019: Clash of the titans

The current market situation, at least for Central Europe, can be summarized as follows: same old story. The price level has neither changed over the past month nor has the general availability of the different module types improved – on the contrary.

Whereas last month it was still possible to order relatively reliable multicrystalline modules for short-term delivery from many suppliers, as early as the beginning of March, even for ‘mainstream’ modules, buyers were put off until April, May, or even June. This is unfortunate for those in Germany who have to connect to the grid by the end of the month to qualify for the current FIT. Starting in April, rooftop systems between 40 and 750 kW covered by the German EEG will be remunerated at just €0.089/kWh – not, as previously threatened, the same rate as ground-mounted systems, but not much higher.

Since there is not much to report on the price front at the moment that I have not already covered previously, I want to turn my attention to the manufacturers themselves and their strategies. In view of the filing of patent lawsuits by Hanwha Q Cells against three of its competitors – not only has it become the center of attention, but also JinkoSolar and Longi Solar have found themselves in the spotlight. REC Group is also known to be involved in the dispute, but I will only refer here to the three companies with production capacities beyond 7 GW, all of which aspire to or are trying to defend market dominance – a clash of titans.

The manufacturers under attack report, however, that they have only heard about this lawsuit through the press. Apparently, none of the defendants had received any mail from the courts as of mid-March. Nevertheless, more or less detailed position statements by the companies are already circulating. Of course, the question arises as to why this dispute is being made public at such an early stage of the dispute. Is this a calculated step or just an embarrassing misstep? What does Hanwha Q Cells expect to gain from this frontal attack on some of its biggest competitors, especially in a lawsuit with an uncertain outcome that could drag on for years? Hanwha Q Cells seems quite confident that it was a pioneer in PERC technology with its Q.antum cell introduced some four years ago and that rivals have merely copied it. The latter reject the accusation, insisting that they concurrently developed this technology themselves and are permitted to use it lawfully.

Aggressive strategy

Whether Q Cells has the resources to survive the dispute to the end is questionable. It is possible that parent company Hanwha, which is worth billions, will have its subsidiary’s back. Products already on the market from JinkoSolar, Longi Solar, and REC are unlikely to be banned under any circumstances – users of these products can breathe easy for now.

Q Cells, the former European industry leader, has been forced to play catch-up with a huge amount of market share since its collapse and insolvency in 2012, shares that have since been lost to the competition. It has already been quite successful, however, thanks to an aggressive product and pricing policy and, not least, the financial opportunities offered by the involvement of Hanwha Group. At least in Germany, Q Cells is already the market leader again with a share of nearly 30%. But at the European level the situation is no longer as clear. JinkoSolar in particular is making inroads into the market. The group has been leading the BloombergNEF list of the largest and financially strongest cell and module manufacturers for a good year now, and it intends to maintain its position in the global market. There is also the newcomer Longi Solar, which, thanks to its consistent growth strategy, has made it into the top 10 producers by capacity within a very short time. So, is it a coincidence that these two companies are among the defendants?

Has Hanwha Q Cells perhaps overreached in the cutthroat competition? Has the group grown too fast, hired too many staff, and accepted too high development and production costs at a time when module prices started their nosedive last year, and thus developed an acute profitability problem? Acerbic voices mutter that the company would be better served putting its own house in order and learning to deliver reliably before entangling itself in protracted legal disputes. Well, perhaps that is precisely the key to finding a way out of the downward price spiral; namely, to have the competition indirectly bear the cost of the development and launch of patented products on the market.

This could be a dead end, however, given the length and complexity of this type of litigation. The current respite in the steady decline of module prices could soon be over. When that happens, other survival strategies will be needed apart from lashing out in all directions. How about high-quality, inexpensive, and, above all, readily available products?

Martin Schachinger, pvXchange.com

March 2019: Groundhog Day…

Numerous indicators point to an impending sharp decline in PV installations, at least in Germany, after March 31.
Availability is poor, prices have largely stagnated since the beginning of the year, and manufacturers have postponed or canceled promised deliveries from Asia. As a result of monthly reductions in feed-in tariffs, we are now seeing a full-fledged run on the few lots of modules still available on short notice. With each passing month, anxiety mounts over whether urgently needed components will be delivered on time. When deadlines are broken, installers face harsh contractual penalties, while system operators rack up major losses. Yet module producers seem to be taking all this in stride.

The eternal pork cycle: Initially, the PV market develops well, with installations almost reaching the level for a healthy industry. Then some institute or other detects overfunding, and drastic measures ensue. The market plunges into turmoil, and the scramble begins to snatch up the last affordable stocks. Resupply can be slow, and subsequent shipments are generally no longer at prices that make new installations viable. Since Europe is not the center of the PV world, manufacturers tend to wait and see how things shape up, preferring to focus on less volatile markets that promise better margins.
Once the pain is sufficiently high in Europe, and installers are prepared to pay inflated prices and forgo returns as the cost of doing business, deliveries resume. This, at least, is the apparent market strategy that some top manufacturers have adopted in the short term. Some module types will presumably not become available with any reliability until June or July, the claim being that factories are working at full capacity to fill pre-orders, according to information from Canadian Solar, JinkoSolar, JA Solar, and Suntech, among others. But modules manufactured up to that point will not all flow to Europe – quite the contrary. Deliveries are diverted or held back to serve preferred markets in Asia and the Americas. In this sense, the market over the next few months will look much as it did in mid-2017, late 2015, and early 2014 – that is, every 1.5 years or so, installation figures will drop off a cliff.
EEG in trouble?
In Germany, the guaranteed FIT in the mid-range system segment will be so low that if material and installation costs remain flat or rise, plants financed under the Renewable Energy Sources Act (EEG) will struggle to turn a profit. However, regulatory hurdles and contractual challenges for tenant power models or PPAs are too high even to attempt, especially for smaller players. Calls for abolition of the EEG are becoming increasingly loud. People are hoping for independence from political whims and what they see as wrong-headed decisions. The media celebrates the first ground-mounted systems that get by without any government-guaranteed funding, but are these utility-scale plants a blueprint for what awaits us in the post-EEG era? I’m afraid not. As far as the broad feasibility of such a concept is concerned, we are only at the beginning. These are important lighthouse projects, but their significance is already dubious.
Without the security of government funding, medium to large investments will no longer be viable. Banks will make a wide berth around any investment in PV where repayment will be secured solely by the creditworthiness of the customer, especially for commercial systems for which long-term use is not assured. So how might an alternative to today’s EEG look? Should the future belong to tenders? Karl-Heinz Remmers recently told me that he could imagine this if accompanied by further smart measures to support the market, but he does not expect anything substantial from policymakers on this issue, even in this legislative period.
We, the renewable energy specialists and stakeholders, should contribute as many intelligent ideas and concepts as possible to avoid a further sustained slump and hand yet another victory to those bent on delaying a rapid phase-out of coal and nuclear.

Martin Schachinger
pvXchange.com

 

February 2019: The snow keeps falling – module prices do not

After a uniquely pleasant but dry summer and autumn, it has been raining and snowing in central Europe for weeks with no sign of letting up. Judging by sheer volume, the god of precipitation apparently wants to make up for his neglect of last year.

The weather of late has conjured memories of the catastrophic winter of 2006. PV plant owners are struggling to maintain the stability of their structures, not least because entering their facilities to clear the snow is nearly impossible in these weather conditions.

It is doubtful that thawing modules by reversing the flow of power in winter is a practical solution. Even if a slab of snow can be set in motion, it is unlikely to get past the edge of the roof or its snow guard system. It is also doubtful that this would make sense from an energy perspective. One approach might be a mechanical snow clearing device that could be used to clean modules in the summer. It is exciting to think about innovations we might be presented with in the future.
But what is the market doing now, and how are module prices trending at the start of the new year?

Slow start
For weather reasons, demand has been flat so far. In the Alpine regions, in view of the massive amounts of snow, it is likely that business is just beginning to ramp up. The rest of Europe is likely hobbled by sustained rainy weather, but that said, in parts of Germany installers seem to have started work already. There is also plenty of catching up to do on projects left idle between Christmas and New Year. The next big cut in feed-in tariffs for mid-sized PV plants is coming up, motivating operators to get their new installations connected to the grid.
Most modules delivered since the second week of January, however, were ordered last year. Those just now going shopping for components may be surprised to find empty warehouses and long delivery times – they will not be picking and choosing among brands and products, at any rate. There are still modules and inverters to be had from wholesalers, but almost all the big manufacturers are virtually sold out, and are consoling their customers with news that deliveries will resume in Q2 or even Q3. Supply is particularly bad for high-efficiency mono c-Si modules. In contrast, multi modules are still plentiful, at least on the spot market.
The current situation is not accurately reflected in module prices. While prices for the mostly multi mainstream modules have stagnated, they have actually dropped somewhat over the previous month for mono (high-efficiency and all black). This can be ascribed to the reduction in prices for products branded AUO-Benq, LG, and Panasonic, which until now have been much more expensive. These mark-downs have a greater effect on the average price of this module class than those of other brands. Unfortunately, customers never see much of these slight but visible discounts because in many cases there is no actual availability. Goods available on short notice may be subject to price movements in the opposite direction.

Pushing performance
One more gratifying development is that the general trend in performance classes continues to creep upward. The target at present can be considered to be 400 W. Manufacturers will be judged on which can achieve this first, with a workable product. I have taken this into account and raised the output threshold between the Mainstream and High-Efficiency module groups by 5 W to 290 W.
The trend towards stagnating prices with slight upward and downward fluctuations will be with us throughout Q1. As long as there are no big surprises from further political meddling, supplies should roughly balance with demand. Global demand will also climb at a moderate rate, as no boom is expected in China before the second half of the year. However, it is still uncertain how the German market will develop following the second quarter when the final stage of FIT reductions bite. I anticipate at least a temporary market collapse and associated oversupply, which could lead manufacturers and dealers to correct prices downward. Just when this materializes and to what extent remains to be seen.

Martin Schachinger
pvXchange.com

 

January 2019: The game goes on

If you want to talk to manufacturers about module prices for 2019 – to submit a binding tender offer, perhaps – prepare to be disappointed. No one knows where the market is headed yet, which is why no one really wants to commit themselves – in other words, planning security is still tending towards zero.

Apparently, the German government's backing off from the short-term cuts to feed-in tariffs in the mid-sized plant segment is still not sufficient inducement for suppliers to ratchet up their capacities or delivery volumes. The deeper cuts to the EEG will now be introduced gradually in February, March and April 2019, rather than as a one-off bump in January. This has done little to calm the market, however.

The forecasts for markets such as Asia and South America also promise continued high global demand and local bottlenecks, with producers speculating on stagnating to slightly rising prices. By way of consolation, the major Asian manufacturers are promising their customers that they will adjust their cell and module prices after the Chinese New Year at the latest; that is, in February 2019.

A glance at 2018 shows that module prices were very dynamic. 2018 was marked by a sharp fall in prices, triggered on the one hand by the cuts in incentive programs in China announced in the middle of the year – which, incidentally, were not as dramatic as initially assumed – and on the other by the abolition of the minimum import price (MIP). After fully five years of market regulation, which the EU Commission believed would counteract price dumping by Chinese manufacturers – a claim substantiated by preliminary investigations – and save the domestic solar industry, the measures were removed in September 2018. Yet their success was modest – hardly any local manufacturer has managed to survive, and the market power of Chinese suppliers is still omnipresent.

The market found its bottom in early October: careening module prices abruptly stabilized. Demand in Europe generally rose after the summer break, which meant that the availability of certain module types threatened to tighten up once more.

The whole situation escalated with the sudden announcement by the German government that it intended to reduce the feed-in tariff for rooftop PV systems between 40 and 750 kWp by 20% to the level of ground-mounted systems as early as January 2019 – allegedly due to excessive subsidies. The resulting commotion in the market eased somewhat once the cuts were ultimately adopted in a more moderate form. Overall, in the fourth quarter Germany achieved very respectable installation figures for new plants, on par with one would actually always wish for, or need, to even come close to achieving the government's self-imposed climate targets.

What’s in store in 2019?

Many tier-1 products are currently either completely unavailable or no longer available in quantities sufficient to accommodate large-scale projects at short notice. The manufacturers in this space say they are sold out until March or April. Although single-digit megawatt volumes are still available on the spot market, customers do not have much choice when it comes to brand selection.

Everything now depends on future developments in regions such as Asia and South America. If demand there persists at a high level – for China an increase of 50 GW or more is already forecast for 2019 – cell and module prices will indeed stagnate in the long term. In Europe, growth is expected to be rather muted again, although some countries are setting ambitious targets for the coming years and announcing new tender models.

Unfortunately, we are still a long way from decoupling market growth from subsidies as long as the regulatory framework for straightforward plant construction under PPAs is still lacking. PV plants that do not require state subsidies or the EEG are still lighthouse projects. The installers of these systems are dependent on the continued fall in module prices, which have yet to materialize.

For 2019, I do not expect any further significant drop in prices, but I do not expect prices to rise either. In the coming months, multicrystalline cells will gradually be replaced by mono-PERC and other highly efficient technologies, leading to some potential savings in the substructure and assembly costs. A revival of thin-film modules is still to come. Nevertheless, there are still far more manufacturers and production capacities beyond First Solar than one might want to believe on the face of it. In the building integration sector in particular, some interesting products are likely to be presented in the near future – so, there is plenty to get excited about!

Martin Schachinger
pvXchange.com

 

December 2018: Zero planning security

“I’m not installing anymore this year – I’m not going to put myself through that kind of stress.”

You increasingly hear this or something similar when you talk shop to planners or installers in Germany these days. And you can also hear some variant of, “If I order more modules now, can you guarantee me that I’ll actually get them on time?”

In short, there is a simmering discontent in the market that occasionally boils over into all-out anger but also expresses itself as simple resignation. So, what is it that has quashed the generally positive mood so quickly?

Well, the politicians are about to bring about what they apparently prefer to do whenever the tender little seedling of solar again threatens to grow into a stately plant – they trample on it by prophesying horrendous costs for the general public, and feed their prognostications with poisoned water in the form of massive cuts in subsidies, the withdrawal of privileges, and further reprisals, to ensure that all new shoots are certain to die of it as quickly as possible.

Unfortunately, the mere utterance of changes and cuts is now enough to confuse the market and bury any planning certainty. This happened at the beginning of November, when the Federal Ministry for Economic Affairs and Energy announced that the feed-in tariff for roof-mounted photovoltaic systems between 40 and 750 kilowatts peak would be reduced by around 20% to the level of ground-mounted systems by January 1.

It is hardly surprising that an unprecedented run on all resources available this year began. However, since no one was prepared for this scenario, capacities became scarce within just a few days, be it for modules, inverters, substructures, or even installation services. The stakeholders, almost without exception, are currently trying to complete any rooftop systems that are halfway ready for construction this year or to push forward projects planned for next spring. Where this is not possible for whatever reason, projects have been put on ice as a precaution. For investors and the entire development of the solar industry, this situation is a catastrophe.

The development of module prices has meanwhile also shown a clear trend towards price stagnation or slight increases. Even before the Renewable Energy Law (EEG) adjustments became known, the major manufacturers had reported an emerging bottleneck, which can be attributed primarily to increased demand in the southern hemisphere and Asia. The few goods still freely available in Europe are now quickly sold out or offered at significantly higher prices. Due to the uncertainty about future developments in Germany, which will continue at least until the next meeting of the Bundestag Economic Committee on December 12, 2018, no reliable statements can be made about the availability and further price development of solar components.

In the spot market at least, we can expect that due to order cancellations, manufacturers and wholesalers will always be able to offer surplus stocks at moderate prices. These prices are likely to fall as the Christmas season and the end of the year approach. If, in the meantime, the political parties send clear signals in favor of easing or postponing the deadline, the situation could immediately change radically. After the good performance of the Greens in several state elections, the party certainly has the political leverage to influence the government’s plans. There is also hope on the part of some SPD and CDU-governed federal states, which have a high density of solar firms and traders.

Indeed, it has become apparent that we will not be able to continue for much longer without resource-conserving, low-polluting energy production, and that there is public demand for more green electricity. Yet, policymakers’ actions speak a completely different language – they have made every conceivable attempt to prevent the rapid implementation of the energy transition. Billions in giveaways to the old energy industry, delays in phasing out coal, Dieselgate, and the unchecked flood of plastics are just a few of the highlights in a gigantic tableau of failure. For years, well-known problems have been covered up and whitewashed, with remedies delayed. But as soon as it comes to the solar industry, it is suddenly possible to push through deep cuts at an accelerated pace at every level within weeks! They claim to want to make the energy transition affordable and protect citizens from unreasonable burdens. The opposite will be the case – it will cost us all dearly

Martin Schachinger, pvXchange.com

 

November 2018: Is the bottom in sight?

October 2018: Everything must go?!

It’s official: as of September 3, the minimum import price is relegated to history! After the majority of EU representatives consulted in preliminary talks spoke out against further market restrictions, the Commission is refraining from a further review of possible acts of price dumping by Chinese manufacturers. In the context of protectionist measures in the USA and corresponding retaliatory measures by Europe and China, continued market restrictions for Asian solar products would have sent a very bad signal.

A chapter that opened in 2013 and led to major turmoil in the PV industry will finally be closed at the end of 2018. There is one thing the very contentious punitive tariffs and protective mechanisms have not achieved, however, and that is the rescue of European cell and module production. From this perspective, the policy was an incredible waste of resources and opportunities that set the European PV market back years. Numerous regions around the world have long since bypassed former leading markets such as Italy, Spain, and of course, Germany, in terms of installation figures. For many years now, European markets have been merely a footnote in solar history.

Waiting for a sign

But what does the abolition of market regulation mean for domestic markets and the further expansion of solar energy? Not all players are back from the summer break yet, either on the supply side or on the purchasing side. Following subdued demand over the past four to six weeks, when prices remained largely stable, machinery now has to be restarted, and many projects may have to be recalculated. To this end, players are awaiting essential price signals from the market. At the moment these are scarce – apparently none of the big manufacturers want to take the first step. They are biding their time, waiting to see when the competition will react, or pointing to well filled order books. For nearly all well-known brands, price corrections in supply contracts are not expected before the end of September, when the current turbulence has subsided.

Increasingly, however, smaller (tier-2) manufacturers are already taking action, and throwing modules into the ring at prices in the lower 20 cent range. Some tier-1 products are also already being offered at prices well below the current minimum import price, even though the information from Brussels is brand new. Thus, index prices have to be adjusted downwards by one to two cents per watt, almost on a weekly basis. Monocrystalline modules in particular have so far been trading here well above world market prices and have a lot of catching up to do. Prices for high efficiency and all black modules have fallen by up to three cents in the past three weeks, while the mainstream module price is only two cents below the previous month’s level. In percentage terms, this corresponds to a reduction of 5.3% to a maximum of 7.5% – the price avalanche is slowly but surely gathering momentum.

One wonders what the next steps will be, and when the first modules made in China will arrive on European shores. Until the official end of restrictions, they were not allowed to be imported into the EU without high penalties. However, we can expect containers to be unloaded in the ports of Rotterdam, Antwerp, and Hamburg in the next few days and weeks, and waved through customs without surcharges. Then, it is a matter of speculation as to what price level will establish itself. Supposedly modules are already trading at prices close to cost of production. On the other hand, large inventories have to be drawn down, and the law of supply and demand still applies. As the end of the price spiral is not yet in sight, there is a rush to liquidate inventories and if necessary to sell goods below production cost to avoid even greater write-downs.

For investors and installers, however, positive development is emerging. Lower prices mean that many projects, especially from previous tenders, can now be implemented more easily, and higher returns achieved. The only limiting factor will be scarcity of installation capacity, which is already becoming apparent. Of course, consideration should also be given to the influence of low prices on quality. Many manufacturers will probably be forced to cut costs wherever possible at the expense of the quality and long-term stability of their products. We therefore need vigilance and a bit of common sense not to leap at every bargain dangled in front of our noses.

Martin Schachinger, pvXchange.com

September 2018: PV poker game

 

With subdued demand over the past four to six weeks, prices have remained largely stable. Only certain products were offered at a discount over the previous month, which has led to minor price changes for high-efficiency modules and standard multicrystalline modules (mainstream). However, the price changes are actually smaller than the rounded index values make it appear, and are in the sub-0.5 euro cents per watt-peak range. Particularly with the major brands such as Hanwha Q Cells, JinkoSolar, and Canadian Solar, there is not much activity at the moment.

There are a number of reasons why retailers’ sales figures are generally weak. First of all, the persistent high tem- peratures combined with the school hol- idays in Central Europe should be men- tioned, which seems rather unspectacular, since this is a seasonal phenomenon and therefore occurs regularly in summer. However, there is another effect at play, which is due to the upcoming but still uncertain decision of the EU Commission regarding an extension of import restric- tions for Chinese cells and modules. On September 3, the measures currently in force will expire and the Commission will have to state whether it will continue to review the dumping and subsidy infrac- tions, or whether it will let the matter rest. In the event of a review, there is a risk  of a provisional upholding of punitive tar- iffs and minimum import prices, at least until the Commissioners have reached a finding. However, this is not anticipated before the beginning of 2019. Since the stakes are high – particularly for man- ufacturers and retailers – rumors and wild speculation abound about the out- come of internal EU negotiations. It should be clear enough that this deci- sion will be influenced largely by foreign policy. Numerous politicians throughout Europe, but also affected companies, have already been consulted and mutual inter- ests weighed in order to come to a con- clusion. But authoritative information that gives an indication of the outcome of the negotiations is nowhere to be found – everything is still wide open, and there are still plenty of things that can happen.

Wait and see

All that remains for the affected compa- nies at all levels of the PV value chain is to wait and see or place a bet on the out- come of the negotiations. Depending on how they read the situation, suppliers are either calm and keeping to current price levels or are betting on the elimination of market regulation measures. As a result, more discounts are now being offered to reduce inventory levels and avoid even greater devaluation. With customers, however, the trend is toward fence-sitting until the decision is announced when they have had a chance to observe how the market reacts before making the deci- sion to purchase – possibly with negative effects. A closer look at the possible scenarios reveals why this is the case:

If import restrictions are lifted, suppliers of inexpensive Chinese goods will very quickly enter the European market, as demand in Asia is currently declining and warehouses are increasingly filling up with available goods. The resulting price slide will inevitably lead to a devaluation of existing inventories in Germany. Even a sharp rise in domestic demand will no lon- ger be able to accommodate the immense quantities of modules. Module prices in the low to mid-20 euro cent range are entirely conceivable for the rest of the year. This would be a highly posi- tive development for investors and builders, as the lower prices would naturally lead to higher returns. The only limiting factor will then be the scarcity of installation capacity.

If the import restrictions remain, however, cell and module prices are likely to stagnate. There are even rumblings of pos- sible price increases triggered by a bottleneck in MIP-free cells and modules. Supposedly, developers in Germany and through- out southern Europe have built up a project pipeline so large that there are not enough non-Chinese modules available to cover it completely and on schedule. The result would be a brawl over delivery capacities and deadlines, as well as a gradual price adjustment to the barely acceptable level, as has often been observed in such situations. Those who find themselves in this situation may regret that they did not take better precautions and avail themselves of one of the module offers currently available. The market is currently a game of chance, with all of the play- ers deciding for themselves which card to bet on, what risks they are willing to take in the game of module price poker, and what they stand to win or lose.                                            Martin Schachinger, pvXchange.com

 

August 2018: Greetings from the madhouse…

Module price index: So ended a recent e-mail from a good friend in the PV industry, a pioneer with over 30 years of experience. It was regarding an exchange about current market developments and the sharp price declines over the past few weeks and months – not a bad analogy!

But the influence on global brand development has never been as great as in this case. All of the forecasts of the past few months have already become obsolete. Instead of predicting a decline in installation figures, the European industry association SolarPower Europe, in its recently published global market outlook, now anticipates a small but very real increase of 3 to 4% in 2018, and 5 to 6% in 2019. Only then will there be a return to healthy growth of 12 to 15% annually, as we have already seen on average over many years. For Europe, however, the forecasts for the coming years are somewhat more ­optimistic, with an average increase of 15%. Within Europe, Germany should again become one of the strongest markets, with an increase of 20%, even without further political support.

Initially, prices for multicrystalline products in particular were expected to continue their precipitous slide due to imminent or current oversupplies. Buyers were hoping for a drop to the €0.25 mark, at least for megawatt-scale volumes. However, the major Asian manufacturers at all levels of the value chain apparently knew how to take quick corrective action. Through artificial shortages, such as production shutdowns, companies are now trying to counteract oversupply and the associated price free fall. Although the effect is not yet immediately apparent, as is evident from the continuing decline in prices, a major crash could probably be prevented in the long term. However, it is doubtful that this strategy will work out in the medium to long term and that prices will stabilize at the current level or just below it.

Europe’s MIP

Module and cell manufacturers with large production capacities in China are waiting for the EU’s minimum import price to be eliminated in September so that they can then offer their modules even more cheaply in Europe. If this actually happens, outlook for the remaining European manufacturers would likely be grim. Their survival would then depend heavily on general market growth, their international business orientation, and strong support from customers. Yet, even if there is a review of the dumping case against Chinese producers and the minimum import prices are kept in place for the next three to six months, it will only be a short reprieve for domestic producers.

I myself expect a general price dip of a maximum of €0.02 per watt peak across all technologies in the fourth quarter. The drop in prices for high-efficiency modules is currently already somewhat more pronounced than for other products, as high performance is itself becoming increasingly “mainstream.”

This is why I raised the lower limit for “high-efficiency” modules to 285 watts peak in May, but these products have become disproportionately cheaper over the course of the year. Nevertheless, the price spread to the mostly multicrystalline “mainstream” modules is still 8 to 10 cents per watt – at the current price level, a difference of 25 to 30%. This price spread cannot actually reflect the difference in the manufacturing costs between monocrystalline or multicrystalline cells, but rather indicates that many modules with lower performance classes are already being sold off close to the production cost to reduce inventories.

Strap on the straitjacket and off into the rubber cell would be the right course of action for some politicians who repeatedly manage to stop generally positive market development through erratic, ill-considered actions and tear down what they have already created.

The best strategy in this roller coaster market is probably to rely on one’s own experience and also a little on one’s own gut. So far, every downturn has been followed by an upturn – usually relatively quickly – because we in the industry have learned to adapt to adversity and make the most of it. In the medium term, the world market for renewables has still grown and system prices have fallen. The motto is to stick to your own vision, and the way ahead is to stay the course in an unsteady market gone mad.

Overview of the price points in July 2018, broken down by technology, including the changes over the previous month
Module class	Price (€/Wp)	Change over previous month	Trend since ­January 2018	Description
High efficiency	0.40	-4.8%	-16.7%	Crystalline modules 285 Wp and above with Cello, PERC, HIT, n-type, or back contact cells or combinations thereof
All black	0.42	-4.5%	-10.6%	Module types with black backsheets, black frames, and rated outputs of between 200 and 320 Wp
Mainstream	0.32	-3.0%	-13.5%	Modules with usually 60 cells, standard aluminum frames, white backing, and 260 to 280 Wp – the majority of modules on the market
Low cost	0.22	-8.3%	-15.4%	Reduced-capacity modules, factory seconds, insolvency goods, used modules (crystalline), products with limited or no guarantee
The prices shown reflect the average asking prices for goods cleared through customs on the European spot market, as of 16 July 2018.

Martin Schachinger, pvXchange.com

 

July 2018: Bad for the industry – but unfortunately, awesome

Module price index: Taken from a song by beloved German group Deichkind, the phrase ‘leider geil’, roughly translated as ‘unfortunately awesome’, applies quite nicely, in my view at least, to the current downward spiral of module and cell prices. Of course, it is clear that some companies – especially module producers – will again fall by the wayside. We wholesalers will also have to contend with the uncertainty of potential customers who cannot decide whether to buy now or rather in a few weeks or even months. But if we are honest and serious about restructuring the global energy system then falling prices are, unfortunately, awesome.

What is behind the continuing downward trend despite a general increase in demand? First and foremost, it is the somewhat surprising announcement made by the Chinese government in May, to make major cuts to subsidies and incentive programs for the further expansion of renewables. Analysts expect PV installation figures in China to fall by 20 to 30 gigawatts compared with last year, which is quite dramatic given the rapid increase in production capacities, particularly in Asia. The reasons given for capping renewables development include the high costs of the enormous build-out in recent years, as well as problems with grid expansion and the connection of new plants. It may be that the decline in China will only have a minor impact on global demand over the long term, being offset by other rapidly growing markets, but the pressure on manufacturers is already mounting due to the overcapacity already present in the market.

Delays in project implementation on the one hand, and uncertainty about future module price developments on the other, have led to large-scale cancellations by a number of major manufacturers in recent weeks. Some of the key players in the industry simply no longer feel bound by their perhaps too loosely worded purchase agreements, which has become a serious problem for suppliers. In times of oversupply the customer is suddenly king; and takes revenge for having been left in the lurch too often in the past. Gone are the days when module manufacturers could pull out of agreements with flimsy arguments to earn a few cents more in another market, and still manage to keep their buyers. Now the tables are turned! Bad for companies, good for market prices, good for customers – unfortunately, awesome.

Following a shortage of inexpensive modules due to artificial bottlenecks caused by market regulations in the U.S. and Europe, and the resulting stagnation in prices, we are now facing a glut of modules which will inevitably cause prices to fall. What seemed cheap yesterday is already too expensive for today's market. Of course, this causes buyers of PV systems to hesitate, and stocks which currently have to be devalued almost weekly, are growing. “I love this business – it never gets boring,” a wholesaler friend recently said to me, not without a touch of cynicism. Planning security? Not a chance! But the old hands of the PV industry have long since come to terms with this. The newcomers, on the other hand, are wide-eyed and wonder why their business models, which have proven so successful in other sectors, do not seem to gain traction in the solar industry. At best, they can quickly adapt to the volatile market situation. In most cases, however, this ends in bankruptcy or withdrawal from the market – and not without serious financial losses.

Does survival in the solar industry or in the entire energy sector really have to be so unpleasant and unpredictable; and if so, why? As long as the solar business – worldwide, by the way – continues to be at the mercy of policies driven by the purely economic interests of the old and large industrial sectors, we will remain a pawn of the forces that cannot be influenced by the environment-conscious citizens and voters of supposedly democratic governments. At the banquet of high politics the stakeholders in the renewable energy industry do not even have a seat at the children's table yet; at best they are permitted to lurk at the back door for a few leftovers to be tossed their way once the business dinner is finished. Good for the economy, bad for the citizen, bad for the environment – unfortunately, not very awesome.

In his recently published outlook for the next ten years, Kalle Remmers expects, “… for Germany […] little political will to implement core projects that serve the further development of our society. In a market as highly regulated as the energy industry, innovations are doomed to failure due to outdated rules.” I can only fully endorse that view! However, ever more rays of hope are coming from Brussels, where the influence of the industry lobby on EU policy is perhaps not quite as strong as on politics at the national level. Following the complaint I raised in my last commentary about excessive pollution in cities, binding targets have now been formulated for the Europe-wide expansion of renewable energies – not to 35 percent, as requested by parliament, but to 32 percent by 2030. Germany has shown itself to be an obstacle to meeting the targets, according to informed sources.

What has become of this country, which only a few years ago emerged on the international stage as an absolute pioneer in environmental issues and as the architect of the Paris climate protection agreement? Soon the requirements will be coming from Brussels and must then be transposed into national law by the EU member states within 18 months. Failure to do so could result in new lawsuits and severe penalties.

Overview of the price points broken down by technology in June 2018 with changes compared to the previous month:

Module class	Price (€/Wp)	Change over previous month	Description
High efficiency	0.42	– 2.3 %	Crystalline modules  285 Wp and above with Cello, PERC, HIT -, n-type – or back-contact cells or combinations thereof
All black	0.44	– 4.3 %	Module types with black backsheets, black frames and rated outputs of between 200 Wp and 320 Wp
Mainstream	0.33	– 2.9 %	Modules with usually 60 cells, standard aluminum frames, white backing and 260 Wp to 280 Wp – the majority of modules on the market
Low cost	0.24	0.0 %	Reduced-capacity modules, factory seconds, insolvency goods, used modules (crystalline), products with limited or no guarantee

 

(The prices shown reflect the average asking prices for goods cleared through customs on the European spot market, as of 13 June 2018.)

Martin Schachinger, pvXchange.com

 

May 2018: He's gone again…

Module price index: … But is he gone for good? We are talking about Frank Asbeck and his company SolarWorld. It was only last August that I reported on the comeback of Mr. Asbeck as an investor and the new/old CEO of the PV module production and sales company that had risen from the ashes of insolvency. Now, the company has been shuttered once again – a new bankruptcy petition has been filed; employees fear for their futures, and the remaining customers for the value of their promised warranties. There do not seem to be many customers left, however; otherwise the story may have turned out differently. Trust in this formerly great German brand seems to have been permanently undermined.

Will the “Sun King” try to ascend to the throne once again? I think he should drop it and abdicate. He has nothing more to prove to himself or us, his place in the history of photovoltaics is assured and he has certainly set aside a tidy sum for his well-deserved pension. Unfortunately, during his last tenure, he managed to cause quite a stir again, at least in the USA, by loudly supporting Trump in his measures to restrict the market. Now, the child has fallen into the well.

In Europe, the voices in favor of punitive tariffs and other protective measures have become quieter in recent months. Even if Asbeck should take up the scepter again, I do not expect any more activity in this respect. The influence of foreign investors in SolarWorld is now too great and level heads seem to have prevailed. As long as European manufacturers lack the financial resources of their Asian competitors and are unable to scale up their production capacities to the same extent, they will be on the losing side – tilting against windmills.

And, while we're on the subject of fighting windmills, this seems to be far from futile – at least in the recent open-technology tenders in Germany. To the contrary, all of the contracts were awarded to photovoltaic projects this time. This has demonstrated once again the technology that is most economical to implement in large projects, even if it only seems feasible using products from the all-powerful Asian competition. It is inconceivable that there could have been a similar result in the tender process if only German or European products had been permitted.

Unfortunately, another German module manufacturer has recently fallen: Calyxo. The manufacturer of cadmium-telluride modules was a spin-off of Q-Cells and has been struggling hard since the latter’s insolvency in 2011. Following the sharp decline in prices for crystalline solar cells, there has been less and less demand for thin-film modules in recent years. First Solar has proven, however, that technology does not necessarily have to hobble a company. The US manufacturer is apparently able to hold its own quite well against the crystalline competition from Asia, not least because of its size. Here, too, economies of scale have paid off, along with an intelligent marketing concept that relies mainly on large-scale plants developed and built either in-house or by a handful of partners. On the open market, First Solar modules are virtually unavailable or, if so, only after a long wait.

First Solar is currently launching Series 6, which it says is a particularly economical module. Considering the power classes from 420 to 450 watt-peak and the module dimensions of two meters by one meter, is already an indication that this is a product purely intended for large-scale commercial plants. Nevertheless, the broad-based rollout of this product is expected to exert price pressure on suppliers of crystalline modules, but not this year. The availability and visibility of Series 6 on the market is far too low.

However, what could put pressure on module prices is the elimination of all market restrictions on Chinese solar cells and modules. Following the official announcement of a gradual lowering of the minimum import prices by 2 cents per watt per quarter, rumors have been circulating for several weeks that the restrictions will be done away with completely. My research did not confirm this, however. The relevant documents only deal with the elimination of anti-subsidy duties, a very small proportion of the total punitive tariffs imposed. There has been no mention of eliminating the anti-dumping component yet. Even if all restrictions were lifted, the price trend would probably not change. Prices are increasingly decoupling from the effects of the EU Commission's market regulation measures.

At present, module prices are again affected predominantly more by supply and demand than by political influence. Moreover, the first large-scale plants in Europe are being built entirely without any major subsidies – in Spain, for example. In Germany, demand is rising continuously with rising temperatures, albeit at a moderate rate. Crystalline solar panels are available in sufficient quantities to trigger across-the board price declines since last month. However, silicon and wafer prices are pointing in the opposite direction, which means that the expected further price reductions at mid-year may not materialize for most module manufacturers. Have we already reached the bottom for the year? Somehow, I cannot really imagine we are there yet.

Martin Schachinger, pvXchange.com

 

April 2018 : It is not hard to become a dealer, but very hard to be a dealer.

February 2018: What the new year
will bring …

January 2018: Always downwards – never up!

Martin Schachinger, pvXchange.com

 

December 2017: Buy or wait?

November 2017: Ratcheting up the pressure

October 2017: Brand name modules sold out everywhere!

September 2017: He's at it again!

Martin Schachinger, pvXchange.com

 

July 2017: The air is getting thin, but we won't let that spoil the mood!

Module price index: Even after the European solar industry trade fair in Munich, Intersolar 2017, prices for all regions of origin and technologies have remained largely stable. The feared shortage is particularly evident in the market for high capacity modules, as well as in European products and previously European brands. Former SolarWorld customers are shifting their purchasing activities in the direction of comparable modules and in the medium term have bought up everything the market has to offer, which is why the modules of some manufacturers will not generally be available again until August or September. Nevertheless, providers remain locked in a fierce price war, preventing the cost of modules from rising, despite a looming bottleneck.

In the module sector, largely unknown manufacturers from the cell and wafer business with tier-1 status are rushing into the market. After Talesun and China Sunenergy (CSUN), HT-Solar (HT-SAAE) and especially GCL are making life rough for the established module manufacturers. Now that SolarWorld, one of the last major non-Asian producers, is out of the race, mainly Chinese companies are battling it out amongst themselves. And although local producers have just barely managed to stay competitive in the European project environment, they have long since missed the boat on international tenders. Prices in international projects – often no more than $0.30/W – are at a level that Europeans can no longer keep up with.

One thing that is still playing right into the hands of domestic companies is the fact that customs clearance for modules from Taiwan and Malaysia is becoming increasingly difficult, even when they are not modules from China with disguised origin, but goods actually produced in these countries. The European Commission is now so strict and resolute that many logistics companies offering importing or fiscal customs clearance as a service have had their fingers burnt. The draconian punishments – retroactive levying of the punitive tariff plus a fine – have led many service providers to make a wide arc around solar modules and cells. In the Rotterdam area, if not across the Netherlands, it is nearly impossible to find a customs agent willing to import Asian modules.

Despite the still turbulent times, the mood at the solar trade fair in early June was generally very good, even though the visitor numbers, and the crush at the trade fair stands, was rather modest. This left more time for intensive discussions and promising sales negotiations. Another thing worth mentioning perhaps is that it was the first Intersolar in Germany for more than two decades – if not since the advent of the solar trade fair itself – held without the participation of SolarWorld. The insolvency administrator preferred not to offer a platform for any embarrassing questions and keep the event at arm's length. Whether this was the right approach for a continuation scenario remains doubtful.

Module and inverter manufacturers were the focus of intense interest, even though you had to look long and hard to find genuine technical innovations in the area of conventional PV technology. That was offset by the many the many new products and services to discover in the energy storage area. Simplified billing methods and the electricity communities that are cropping up everywhere make it seem like we are on the cusp of a breakthrough. Convinced of this certainty, the market leader Sonnen was not alone in partying after the official close of the trade fair, Senec and Mercedes, too, invited guests to their booth parties offering both culinary and acoustic counterpoints – a battle of the parties fraught with symbolism.

Energy storage systems are the next big thing in the photovoltaic industry… heard that before years ago? Well, now it seems it is finally becoming a reality!

Martin Schachinger, pvXchange.com

 

 

June 2017: An occasion to celebrate… or is it?

Module price index: SolarWorld is broke! At least one of the best known international solar companies in Germany has filed for the initiation of insolvency proceedings. “Can it be?” say some, “It’s about time!” say others, and they are in the majority. The latter are basking in schadenfreude and most of all, relief.

I personally could not decide if I should celebrate or mourn the loss. Of course, I am an opponent of the partitioning of the U.S. and European Solar markets initiated by Frank Asbeck and SolarWorld through punitive duties on Chinese cells and modules. Nevertheless, I am not yet sure if the failure of the self-proclaimed sun king is really a reason to celebrate.

Yet another high-profile bankruptcy at a time when the market is just starting to pick up again is likely to hurt the reputation of the industry. There are still hard-headed people who doubt the success story of renewables, and will do whatever it takes to undermine it. For these people, such a bankruptcy is a godsend. They will claim that at the expense of the public, an industry that cannot survive on its own has been propped up until its demise was finally inevitable. This is of course complete nonsense. By clinging to old structures and business concepts, Asbeck has no one to blame but himself for his company’s fate. It is not hard to find alternative scenarios at other pioneering German solar firms, which are now well-positioned on the international market.

In my opinion, there are now two possible scenarios for the European and U.S. solar industries: the “tough get going!” scenario and the “chalk it up to experience and drive on!” scenario. Asbeck and like-minded entrepreneurs are now starting to lash out wildly, demanding even more protectionist measures (even though they have not really had any effect) to drag even more companies, such as suppliers and sales partners, down into the pit. Suniva, which recently went bankrupt, has been an adherent of the “tough get going!” faction. The company is suing in the USA for import tariffs on solar components and a world-wide minimum import price for modules of $0.78. If it manages to push this through, it would be the coup de grace for the North American solar industry.

It seems easier to empathize with the “chalk it up to experience and drive on!” scenario. Now that the Asbeck era is drawing to a close, there are scarcely any advocates of anti-dumping tariffs and other market restrictions. Once again, market price will be determined by supply and demand and no longer by protectionist measures. Most European manufacturers produce where cost-efficiency is most favorable anyway; in Asia. Solar components will have an ever-diminishing share of the total value of an energy generation and distribution system. Good engineering, maintenance, and optimization will increase in importance. These are services that can only be provided on-site and not outsourced to Asia.

What is going on beyond the headlines? Prices for c-Si modules in Europe continue to hold steady around the €0.40 mark or slightly higher. The local market has stagnated somewhat in the first quarter due to the weather. In April, everything seemed to fall into place, installation figures have been rising steadily, particularly for small and medium-sized systems. Even the slightly falling feed-in tariffs coming soon to Germany will not stand in the way of this trend. The comparatively high installation figures in November and December caused by one-off effects (EEG adjustment in January) have again triggered the mechanism laid down in the EEG. In other European countries, like France, new incentives and the success of political moderates will likely also spur positive development.

It will be exciting to see what happens to price and market development after the third quarter of this year. It appears that the current stagnation in module prices is only superficially the result of a shortage. In reality, many players in the industry are expecting a global price decline in the third or, at the latest, in the fourth quarter of the year. The expectation is based on the rationale that demand for modules in China will dwindle, which in the past has always been observed at the end of the year. In order to start the price war at the highest possible starting value, many manufacturers are currently trying to maintain the highest prices possible. We will have to wait and see if this assessment pans out.

Martin Schachinger, pvXchange.com

 

May 2017: Two-class society

Module price index: Due to a leap in demand in early March isolated supply bottlenecks have actually even nudged prices upward, at least for panels from tier-1 manufacturers available on short notice. Delivery times of one to two months for higher performance classes exceeding 265 Wp are currently not out of the ordinary. Only those who have planned ahead and concluded a delivery agreement with a trusted manufacturer can afford to sit back. Seat-of-the-pants outfits will either have to wait or hope that inventories are freed up.

Installers who think they can simply fall back on cheap monocrystalline modules of a lower performance class are headed for a rude awakening. Neither the supply, nor the price is favorable at the moment. Apart from the fact sub-270 Wp monocrystalline modules are scarcely available on the European market anymore, the price difference between them and their polycrystalline counterparts with the same output is 4 to 8 euro cents per Watt-peak, which at current price levels is 10 to 20%. Scarcely anybody is willing to shell out this extra cost. Somewhat more relaxed is the current supply situation for polycrystalline modules up to 265 Wp, in particular products of lesser known brands.

As recently as two years ago, the demand for monocrystalline modules, even for large-scale commercial PV plants, was definitely noteworthy. Some, especially Chinese manufacturers, provided only this type of cell because customers were still willing to pay above the minimum import price of 53 to 56 euro cents per watt-peak for the monocrystalline varieties. However, the price for polycrystalline modules of the more prestigious manufacturers at that time were just a bit lower. But since the price collapse in the middle of last year, the gap between the prices for these technologies is widening. Module manufacturing costs, still largely dictated by cell prices, cannot be discounted at the same rate, making monocrystalline modules very uncompetitive in the reawakening volume market.

This module variant continues to be attractive only at performance classes that polycrystalline modules have not achieved yet. This efficiency range is now dominated by the PERC technology, for which module outputs of 300 Wp in a standard module with 60 cells is not problem anymore. Also, the increase in the number of cell connectors from three to four, five or even more bus bars, as well as other semiconductor doping methods or heterojunction technology make it possible to boost cell, and thus module, performance. The price war with ever-cheaper polycrystalline products is still an uphill battle, however. For instance, high performance modules are increasingly serving a market niche, which demands these fine pedigree products for reasons of limited space or visual requirements. The mass market, in particular the project business, is increasingly embracing inexpensive polycrystalline modules.

Although numerous manufacturers are making the foray into Poly-PERC technology, few have dared to launch their products on the market. On the European market such products are only available from a few providers, including Hanwha Q-Cells and REC Solar. Many manufacturers are still working feverishly to improve the persistent problems of mechanical stability and output stability. There are known cases in which initially above-average performance of polycrystalline modules has dropped by up to 10% on average just a few months after delivery. No manufacturer wants to face the resulting wave of complaints, which means that for the time being the high-performance module market will continue to be the dominion of monocrystalline modules.

SolarWorld announced recently that it would gradually reduce its product range of polycrystalline modules to completely specialize in high performance monocrystalline modules. Even now, the manufacturer offers a wide range of standard modules, glass-glass and bifacial modules with monocrystalline PERC cells. In so doing, this manufacturer, like others that follow in its footsteps, will veer away from the mass market, over the medium term, and into a niche. Whether this niche is big enough to accommodate many different, primarily European, Japanese and Korean manufacturers is doubtful. New, more all-encompassing product concepts are needed, but you still need a magnifying glass to find them.

Martin Schachinger, pvXchange.com

 

April 2017: Season off to a false start? Not necessarily…

Module price index: The European photovoltaics market has not yet lived up to the expectations many observers had for it after the strong increase in installation figures in November and December 2016. Although there has been an overall revival by comparison to the first quarter of last year, the market has still failed to really take off. The weather cannot really be the root of the problem — the winter has been and continues to be very mild. But it cannot be down to module prices either, as these continue to fall, albeit more slowly, but continuously and on a broad front. Except for the prices of Chinese crystalline modules, prices in every other category have fallen at least 1.0 euro cent per watt-peak from January to February – although, they have rebounded somewhat in March.

Why is it, then, that the rate of PV expansion is seeing such slow growth? Should we concede to the view of Milan Nitzschke, of EU Prosun, who continues to maintain that market development has nothing to do with the price of panels and claims that the high minimum import price imposed by the EU commission is not harmful to the industry? The strong gains at the end of last year, so the story goes, were the result of a last-minute panic prior to the amendment of the German Renewable Energy Act (EEG). I maintain, however, that that is precisely why the installation figures have not exploded yet.

The players in the industry need time to get used to the new regulations and adapt their business models. Revised versions of the EEG never provide acceptable preparation time or planning security due to the numerous corrections usually made to draft legislation right up to the last moment. Existing concepts and pre-developed projects have to be adapted to the new conditions, for instance, before a company can think about building them. In the current case, it is the inclusion of all roof installations above 750 kilowatts in the tender process, and freeing up of open areas on this scale that is creating plenty of work for designers.

However, given attractive module prices, numerous solar companies are building a respectable project pipeline, which can be worked off over the coming months. Companies are continuously seeking and comparing offers for material for those projects, even though the actual delivery dates are not even scheduled yet. In view of the still volatile prices, hardly anyone wants to make a long term commitment, which is not making forecasting and planning any easier for suppliers. Nevertheless, the order books are filling up, which is cause for optimism in the German and European photovoltaic markets in general.

In many companies and larger O&M service providers, the annual maintenance season has also begun. After the winter many installations have to be inspected, cleaned and defective modules replaced. Since many of the module types used are no longer produced, procuring a suitable replacement is not always easy. Certain providers can supply identical or similar products, but often only in limited quantities and at prices many times higher than the current market price. Particularly at the now low price levels, more and more operators are opting for a complete overhaul; that is, getting rid of all of the old modules and installing the latest generation of crystalline modules.

This is also true of PV systems installed just a few years ago with thin film panels that now have yields 15 to 20% below the anticipated value. Unfortunately, the module manufacturers are only liable in a scant few cases, since many of them filed for bankruptcy years ago. Often, the only option left for operators is a complete rebuild at their own cost. What until recently was not feasible economically is at today's module prices worthy of consideration. In favorable circumstances, so-called “re-powering” of a PV plant can pay off in just a few years for plants with a relatively high feed-in tariff that still valid for a long enough time.

Martin Schachinger, pvXchange.com

 

March 2017: China first!? – Make Photovoltaics great again!

Module price index: Donald Trump's pronouncements and platitudes are on everyone's lips these days – they are frequently quoted, misquoted and lampooned, and always met with a healthy portion of dark humor. But Trump’s utterances can also be very pithy and can reduce the most complex issues to a few superficial words. Even ordinary citizens like you and I can understand him. But sometimes, such simplistic statements are right on the mark.

The European solar industry is apparently not so easily influenced by the new American strongman, even though some of Trump's words and actions are certainly cause for concern. But, luckily, the final word has not yet been spoken – not by a long shot – and positive developments are gaining traction. The construction boom in Germany, spurred by continuous price declines in recent months, continued unabated in January. At 600 megawatts-peak, the cumulative amount of additional construction in November and December amounted to nearly half of newly installed photovoltaic systems for the entire year. Both rooftop and ground-mounted systems alike saw a considerable increases.

There can be no doubt that the increase is due to highly favorable price developments for operators and installers. In the last quarter of 2016, module prices slumped across all regions of origin by up to 15 percent. But the price decline seems to have slowed somewhat and in January and February there were no major changes  – at least for higher-quality modules. But some rack and inverter manufacturers have lowered their prices across the board, which has made complete PV systems available at historically favorable conditions.

The lowest prices ever recorded – at least since the beginning of module price monitoring and record keeping – have led to a strong increase in demand, as expected. That makes it all the more strange that the European Commission still refuses to budge on its market restrictions in the form of punitive tariffs. The EC has softened its original plan to keep the measures in place a further 24 months. The background is that the EU Member States called upon to vote two weeks ago rejected the restrictions with a simple majority, which unfortunately was not adequate to completely overturn them. Now a new proposal is on the table to shorten the extension of the existing measures, which have been in place since 2013, to 18 months and consider a “phased elimination” of the measures altogether, whatever that means.

Of course, there were immediate protests from minimum import price advocates from the camp of the manufacturer SolarWorld and the EU Prosun association. They argued that a longer duration was urgently needed to finally create fair competition and planning security for investments. The Commission Vice President Frans Timmermans countered, however, that the EU had to respect the interests of companies that depend on these imports to sell their products and services, companies that also employ thousands of people in Europe. Moreover, he said, solar energy was essential for the achievement of Europe’s environmental and climate-protection goals.

Obviously, some of the players in the industry either have not fully grasped China’s existence and role in the whole process or have ignored the fact in a negligent manner. Those who actually believe that the Chinese solar industry will allow itself, through isolation and punitive tariffs on Chinese-made products, to be deterred from dominating the market and winning the trade war is living a fantasy. It is simply part of the Chinese self-image to break through resistance, interpret rules as they see fit, and adeptly bypass rules that threaten economic disadvantage.

Experiences over the past three years with anti-dumping and anti-subsidy measures have shown how seriously Chinese cell and module manufacturers take this issue – and pangs of conscience: non-existent. Such restrictions entice the smaller companies not listed on western stock exchanges to exercise special creativity in disguising and bypassing EU measures, whereas the larger and more prestigious companies prefer to build and open production facilities all over the world whose output is not subject to import restrictions. Until we get over this, the European market will simply be left by the wayside – what a smashing success for us Europeans!

Such pedantry can never defeat an emerging global economic power like China or even constrain it for two or three years, as has been demonstrated. Even if the EU Commission hammers out some sort of lazy compromise solution, who cares? A workaround will be found. But probably not a single European manufacturer will survive thanks to these measures alone. But why waste time playing air guitar? Why not enter into a dialogue and work out deals that help both Chinese and European companies achieve equal measures of success? Accusations and prohibitions do nothing more than challenge the confident economic power of China to wage a trade war that we cannot possibly win. On the other hand, a good deal for both sides will make China an ally.

Martin Schachinger, pvXchange.com

 

February 2017: Back to the old size – will 2017 be a super year for solar?

Module price index: Module prices are falling steadily, and the November installation figures in Germany already show an increase of around 50% over the previous month. While the exact figures are not out yet, December is also likely to deliver similarly positive results. The 1 GW mark may be slightly exceeded in 2016, which is likely thanks solely to the current drop in prices. However, following an across-the-board decrease in December by an average of 2% in nearly every region of origin, prices stabilized noticeably in January.

The jump in demand over the past few weeks has already prompted some manufacturers to report their first bottlenecks and supply problems. However, they should be able to take up the slack again in February, so customers will just need a bit of patience. Many orders had already been placed in December, even though the corresponding projects will not be completed until sometime in the first quarter of this year. For planning security reasons, master agreements are once again being negotiated. But because it is not entirely clear which direction module prices are headed, flexible price clauses are finding their way into these agreements – some suppliers and manufacturers are quite open to such practices. Buyers able to incorporate these clauses into their contracts should stipulate that the final price for each individual purchase should be dependent on the development of the market price relative to the negotiated price at the date of the signing. The reference for the adjustment should be a generally recognized photovoltaics price index.

But it is still difficult to provide a reliable forecast for all of 2017. Overall, the prospects for this year are very good, because there is pent-up demand, particularly for systems intended for German ground-mounted PV plant auctions. An increase in the EEG feed-in tariff is also expected in February. Although some analysts are still cautiously optimistic, all project a noticeable increase over last year's installation figures. The forecasts for the year ahead range from 1.4 GW in Germany to more than 2 GW. It is even possible that we could meet the German government target corridor of 2.3 to 2.5 GW, and thus at least double the expansion figure. For Europe as a whole, a solid increase is expected but will likely be a bit more staid because the United Kingdom's contribution to installed capacity will probably have little effect this year.

What else could have a negative impact on development? The European Commission is still clinging to its protectionist measures and its minimum import price for Chinese modules. However, the level of the minimum price going forward is still up in the air. It may be that the commissioners are simply succumbing to the pressure of individual actors but do not even believe anyone still cares about the measures. Chinese manufacturers have long since adapted to the situation and built up large production capacities in regions free of punitive tariffs. Only a radical tightening of the conditions could stem the comeback of Asian modules on the European market.

Punitive tariffs would have to be imposed on all products produced outside the EU. But that would deal a hefty blow to some well known European brands like IBC, REC, Luxor, Q-Cells and even SolarWorld. We can, therefore, expect that the big Chinese manufacturers will soon reconquer the European photovoltaics market. After dropping off the radar for the past two or three years, the tier-1 manufacturers Suntech, Trina and others – none of which are part of the undertaking – are piling back into the market with very attractive prices. Most notable among these are Hanwha Q-Cells, Canadian Solar and Jinko Solar, which have formulated ambitious sales targets.

A big downward move in prices is probably not on the cards, as that already happened in the last quarter. Prices for standard modules will initially cluster around the 40-cent mark, or perhaps slightly below that for high volume orders. But at that price level, nearly any type of project can be implemented economically – there is no longer any reason to hold off before starting a project. But this will ultimately bely the claims of proponents of EU punitive measures who have denied the connection between market price and market development, because political conditions in Europe have not changed fundamentally since last year.

Martin Schachinger, pvXchange.com

 

January 2017: Efficiency up, price down – more power for less cash in 2017

Module price index: After another sharp drop in November, prices for PV panels have generally stabilized in the first few days of December. Dealers seem to have woken up to the fact that even prices under €0.35/W are not enough of an incentive to make a purchase in the last few weeks of the year. PV plants that had to be built in 2016 have already been thoroughly planned and the materials purchased. And buying modules for projects coming up next year is not on the minds of many installers. Although conditions and prices are being carefully monitored, hardly anybody wants to commit in a market with such volatile prices. It is still unclear whether prices will continue to fall further, especially for panels in the higher performance classes. We have seen astonishing development in that segment over the past few months.

Availability of newly produced modules in the mid-range performance classes is drying up. Although 255, 260 and 265 W for modules with 60 monocrystalline cells was the general standard until recently, there is now a strong trend in the direction of 270 to 280 W. Up to now, however, this kind of performance could only be achieved by modules with monocrystalline cells which, justified or not, were then sold at a markup. Through the widespread use of PERC and PERT technologies in European and Asian module manufacturing, high capacities can now be achieved with polycrystalline, resulting in much cheaper cells.

Some manufacturers, such as Q-Cells, have announced the launch of polycrystalline modules that achieve output up to 290 or even 300 W, which will be available in the first quarter of 2017. The peak output of monocrystalline modules from the top manufacturers in Europe and Asia are already pushing 310 W and at lower prices than those offered by LG Electronics, AUO, BenQ and Panasonic, which until recently divided the market for ultra high efficiency modules amongst themselves. And how have these manufacturers responded to the trend for ever-higher performance at steadily falling prices? At Sunpower, at least in Asia and the United States, a large-scale consolidation phase is underway, which unfortunately has cost a lot of people their jobs. At the same time, Sunpower is gradually taking over joint cell production in Singapore, while AUO is investing more money and energy into the development of its own high-efficiency cells.

LG Electronics recently launched a 60-cell bifacial glass-glass module, which due to its active back panel can deliver up to 25% more yield in optimal conditions. The company says that the new solar panel can achieve peak performance of up to 375 Wp. In contrast to the now insolvent US manufacturer Solyndra, the company bases its price calculations on the maximum front-side output under STC of 300 Wp. There is so little variety and availability of glass-glass unifacial and bifacial modules that prices have not dropped under competitive pressure or high demand. The prices for products available on the market – products from companies like SolarWorld or Sonnenstromfabrik – are still trading above the €0.60 mark.

But other companies are constantly working to optimize the performance and efficiency of their modules. Through new contacting techniques and material combinations, efficiencies beyond the 20% mark will soon be commonplace. Due to the resurgence of heterojunction technology (HJT/HIT), efficiency improvement to up to 30% even appears to be within striking distance for industrially manufactured cells. Furthermore, light-induced degradation (LID), which used to be a standard variable in all simulation programs and economic feasibility calculations and on which performance specifications are based, could become a thing of the past through the transition to n-type solar cells. The near future is certain to hold some exciting developments and product launches.

Does it make sense in today’s market to sign supply agreements before year's end or even lay up goods in a warehouse that will not be installed until springtime, or would it be better to wait and see? Forecasting price developments for the near future is not an easy call right now. Some manufacturers are convinced that the market has found the bottom, and that module prices will rise slightly at the beginning of the new year. They are basing their claim on rising demand, particularly in Asia, in the face of supply bottlenecks. However, current unutilized capacities in China may be so vast that they can easily cover any uptick in demand, either domestically or in any market not saddled by restrictions. That would argue against any noticeable price rise.

People who want to equip their PV systems with highly efficient modules can afford to wait and speculate on ever-expanding product diversity and falling prices. The only ones who need to hurry are designers and installers whose projects have been collecting dust in a desk drawer in the hope of better times – for instance, the numerous yet-to-be-built systems from German ground-mounted plant tenders. Many of these systems were designed to use modules at the lower end of the efficiency spectrum. But the availability of such products, as already mentioned, is starting to wane, which does not exactly bode well for price development.

Martin Schachinger, pvXchange.com

 

December 2016: Red light, green light

Module price index: Once again the market is running circles around the politicians. A look at current module price development makes this imminently clear. While the European Commission continues its brooding over the question of whether Chinese manufacturers are still engaged in price dumping and whether market protections are still justified, module and cell prices have long since reached a level that is as much as 30% lower than the minimum import price. Of course, effects such as year-end inventory clearance sales and overproduction in a faltering market again come into play, but even most European manufacturers are adapting to the general trend without complaining, and reducing their module prices month after month. But where's the bottom? That is a question dividing the various stakeholders and analysts. In any case, prices continue to fall, particularly for high-performance modules.

A continued decline in prices without any significant rise in installation figures in the German and European markets is expected in the final months of 2016. However, a more or less significant uptick in the market is projected for 2017, in Germany at least. Prices are expected to stagnate or rise slightly before gaining traction. The industry will have to adapt to the expected final draft of Germany's Renewable Energy Act (EEG) 2017. The final draft has been approved by the European Commission with regard to the new rules for tender procedures, which means that no more pushback from Brussels is expected. A boom in commercial-roof and ground-mounted systems up to 750 kWp is expected, since there is no tender obligation. Although EEG feed-in tariff levels for PV systems will initially remain unchanged in January, the adjustment mechanism has been adapted to react more quickly to changes in the market.

Remember that the EEG 2014 specified a gross expansion corridor of 2,400 to 2,600 MW per year and a monthly degression of 0.5%. The review and reference time-frame was 12 months. In the event that the corridor was exceeded by more than 900 MW, the feed-in tariff degression would increase to 1.4%. The rates would remain the same if less than 1.5 GW (2,400 minus 900 MWp) were installed. By the way, we have been in this mode since the fourth quarter of 2015. According to the old EEG, rates did not really start to climb until new installations fell short of the 1 GW mark (2,400 minus 1,400 MWp). In the EEG 2017, the reference period has been shortened to eight months, and the steps have also been reduced. According to the new scheme, feed-in tariffs will be eligible for a rise of up to 3% per month after 1 February 2017 – a positive prospect indeed, and a solid support for the market growth desired.

Far less positive is a recent report that the European Commission's Director-General for Energy is planning to eliminate the feed-in priority for photovoltaics and wind power in the new renewable energy directive. If this rumor turns out to be true, it would be a yet another crushing blow to renewable energy. Renewables would have to compete directly with conventional power plants, which could result in a renaissance for coal and nuclear power in Europe. That would be a sure way to torpedo the European climate targets and miss them by a mile. Such a profound lack of understanding of the necessary consequences of one's own actions and depth of ignorance about the climate protection efforts of the member states is hard to imagine, even in Brussels.

For a while it looked as if the German environment minister Barbara Hendricks would fly to Morocco for the COP 22 Global Climate Change Conference without any concrete climate protection plan. Now, the German government seems to have gotten up to speed at the last minute and agreed on a common formulation. Nevertheless, the result cannot be regarded as anything less than a lazy compromise because there are still far too many concessions to business interests and no concrete date for pulling the plug on coal. The erstwhile front-runner of climate protection has become a tired old nag. That will be sure to trigger a few discussions and fuel plenty of misunderstanding with regard to the challenges that lie ahead. How clear do the signs have to be, how great the emergency before political elites are ready to follow up their high flying talk with meaningful action?

Martin Schachinger, pvXchange.com

 

November 2016: Red light, green light

Module price index: The market is once again running circles around politicians, with Europe particularly leaden-footed.

While the European Commission continues its brooding over the question of whether Chinese manufacturers are

still engaged in price dumping, module and cell prices have long since reached a level that is as much as 30% lower than

the minimum import price. Of course, effects such as year-end inventory clearance sales and overproduction in a faltering

market again come into play, but even most European manufacturers are adapting to the general trend without complaining, and reducing their module prices month after month. But where’s the bottom line? That is a question dividing the various stakeholders and analysts. In any case, prices continue to fall, particularly for high-performance modules.

A continued decline in prices without any significant rise in installation figures in the German and European markets is expected in the final months of 2016. However, a more or less significant uptick in the market is projected for 2017, in Germany at least. Prices are expected to stagnate or rise slightly when the market gains traction. The industry will have to adapt to the expected final draft of Germany’s Renewable Energy Act (EEG) 2017. According to the new scheme, feed in tariffs will be eligible for a rise of up to 3% per month after February 1, 2017 – a positive prospect indeed, and a solid support for the market growth desired.

Far less positive is a recent report that the European Commission’s Directorate General for Energy is planning to eliminate the feed-in priority for PV and wind power in the new renewable energy directive. If this rumor turns out to be true, it would be yet another crushing blow to renewables. They would have to compete directly with conventional power plants, which could result in a renaissance for coal and nuclear power in Europe. That would be a sure way to torpedo the European climate targets and miss them by

a mile. Such a profound lack of understanding of the necessary consequences of one’s own actions and depth of ignorance about the climate protection efforts of the member states is hard to imagine, even in Brussels.

For a while it looked as if the German Environment Minister Barbara Hendricks would fly to Morocco for the COP 22 Global Climate Change Conference without any concrete climate protection plan. Now, the German government seems to have gotten up to speed at the last minute and agreed on a common formulation. Nevertheless, the result cannot be regarded as anything less than a lazy

compromise. The erstwhile front-runner of climate protection has become a tired old nag. That will be sure to trigger a few discussions and fuel plenty of misunderstanding with regard to the challenges that lie ahead. How clear do the signs have to be – how great the emergency before political elites are ready to follow up their high flying talk with meaningful action?

Overview of new price points for October 2016 with changes indicated:

Module Class	Price (€/Wp)	Change comp. with previous month	Description
High Efficiency	0.60	-3.2%	Crystalline modules 275 Wp and above with PERC, HIT, n-type or back-contact cells, or combinations thereof
All Black	0.54	-1.8%	Module types with black back sheets, black frames and a rated power between 190 Wp and 270 Wp
Mainstream	0.46	-2.1%	Modules typically with 60 cells, standard aluminum frame, white backsheets and 245-270 Wp, represents the majority of the modules on the market
Low Cost	0.34	+3.0%	Low-output modules, factory seconds, insolvency goods, used modules (crystalline), products with limited or no warranty

The prices shown indicate the average asking prices for duty-paid goods on the European spot market for the month of October 2016.

Author: Martin Schachinger, pvXchange GmbH

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October 2016: Price slide continues

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September 2016: The price war begins

Module price index:Across most of the globe, module prices have plummeted as the industry comes out of a strong manufacturing period.

The downward trend in module prices over the past few months has held steady in August. The only outliers in the down-ward slide were modules from Japan and South Korea, with average prices slightly above the €0.60 ($0.67) mark. Trend lines for products from China and Europe are once again converging, but at a level some 10% below that of last year. These mod-ules cost an average of €0.52 ($0.58) per watt in August. The modules surveyed span a price range of €0.45 ($0.50) to €0.65 ($0.72) for Chinese products and €0.49 ($0.54) to €0.73 ($0.81) for German goods.

The most recent minimum import price of €0.56 per watt negotiated between the EU and Chinese manufac-turers appears to have completely gone out the window. Now that they are free from the burden of restriction, Asian manufacturers appear to have slipped casually back into their low-price poli-cies. The continued punitive tariffs lev-ied on modules manufactured in China are no great annoyance to these corpora-tions, since nearly all of them now oper-ate cell and/or module production facili-ties outside of their home country and are therefore not impacted by the penalties.

Up to now, the average price spread for the year between European and Chi-nese products has been €0.02, However, German manufacturers Aleo, Heckert and Solarworld almost simultaneously slashed prices in the first weeks of Sep-tember. They justified the reduction cit-ing lower global market prices for cells on the one hand, and general overpro-duction on the other. The latter is under-standable with the loss of the U.K. market and significantly slower expansion rates for PV elsewhere, however we could not confirm a drop in cell prices.

Thus, a steadily escalating price war at every level of the value chain is on the cards. The first manufacturers are already surging ahead and others will have to rush to follow suit. Big Chinese manufac-turers have taken up their positions and will not yield ground to European competitors without a fight. Some manufac-turers could offer discounts in the range of 10% – in some cases these are already in the works. In any case, fairer mar-ket prices will give the European solar industry a boost, as long as the players can manage to pass on the low wholesale prices at least in part to their customers.This raises the question of what justi-fies continued market restrictions against China if all of the manufacturers beyond a certain size are now in a position to unload modules for significantly less than €0.50 ($0.56), 20% under the cur-rently applicable minimum import price?

At least one thing seems certain: The protectionist measures of the EU are hav-ing less and less effect. It will be inter-esting to see the upshot of the European commission’s review of the policy, and what new regulations Brussels will come up with to avoid scrapping the whole thing. Perhaps we will soon celebrate a new minimum import price of €0.46 for all non-EU modules – a comfortable level for the remaining European manufacturers.

Overview of new price points for August 2016 with changes indicated:

Module Class	Price (€/Wp)	Change comp. with previous month	Description
High Efficiency	0.66	-2.9%	Crystalline modules 275 Wp and above with PERC, HIT, n-type or back-contact cells, or combinations thereof
All Black	0.56	0.0%	Module types with black back sheets, black frames and a rated power between 190 Wp and 270 Wp
Mainstream	0.49	-2.0%	Modules typically with 60 cells, standard aluminum frame, white backsheets and 245-270 Wp, represents the majority of the modules on the market
Low Cost	0.35	+2.9%	Low-output modules, factory seconds, insolvency goods, used modules (crystalline), products with limited or no warranty

The prices shown indicate the average asking prices for duty-paid goods on the European spot market for the month of August 2016.

Author: Martin Schachinger, pvXchange GmbH

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August 2016: What counts …

Module prices: In an overall quiet market characterized by the onset everywhere of summer vacation, module prices generally declined in July. Prices for European and Chinese modules were in a neck-and-neck race to the bottom, and even reached a low for the year.
To complete the unfinished sentence in the headline, I’ll allow my self a small digression. Every one of us makes purchasing decisions every day. These affect our future life; sometimes more, sometimes less. We apply a standard to the offers made to us, a standard derived from our experience and expectations. The more diverse the offers are, the more difficult and lengthy the selection process is. A lack of information can also make the decision difficult. Ultimately, the gut plays a decisive role in many of our decisions.

Let’s apply this simple wisdom to the module market. Although the diversity on offer has become much smaller than it was even just a few years ago, it is still hard to get one’s head around. The information we get about the products, however, is usually fairly paltry and highly influenced by the sales ambitions of the purveyor. Often, even the origin of the modules and their composition (cell quality and origin) are scarcely discernable. You can trust the manufacturers’ information, or not. The current situation of market restrictions and MIP has provoked sellers to mask the origin of materials.

Another key point is product quality, which also depends on origin. If the origin is unknown, judging quality is reduced to a crapshoot. Buyers who do not check this themselves, but instead trust manufacturers’ guarantees, are naive. So many apparently solid producers have already overstepped boundaries, making their warranties worth little more than the paper they are printed on. Even random testing of every delivery has failed to protect buyers from surprises. Nevertheless, meticulous visual inspections and performance testing at least provide a minimal measure of assurance.

Should a problem with a purchased and installed product crop up in the future, the presence of a solid warranty is desirable. But this is only true in two instances: either the manufacturer still exists and has a European branch office, or the buyer has purchased warranty insurance. Unfortunately, false information about insurance leads to mistakes, which can bring disappointment when trouble strikes. The insured party must always be the owners of PV systems themselves. Insurance drawn on insolvent manufacturers is worthless. Larger systems should therefore be insured directly and comprehensively. One indicator of the solidity of a manufacturer is the bankability of its products. Caution is advised with non-bankable products.

Without binding information, it is impossible to make a decision. The variety of products on the market is a high-stakes gamble with potentially big losses. For instance, if presumably MIP-free modules actually come from China after all, buyers may risk criminal charges. In any case, the punitive tariff would have to be paid retroactively, regardless of the channel used to acquire the panels.

Chinese firms now lead the list of tier-1 manufacturers, a collection of the most solid and financially strong PV producers in the world. Combing through the few surviving European producers reveals that most of them, even those that still produce, have just a few years left at best, even with the continuation of MIP. Technologically, Asian manufacturers no longer have to hide behind their American or European competitors, thanks in no small part to the intentional or unintentional knowledge transfer over the past few years.

But how can buyers tell if the price is right? Simple: they follow the monthly price index, which in addition to information regarding origin also takes technological differences into account. An offer for modules with a price that falls below the average price in the index can be considered a bargain. If all of the other factors, such as module efficiency, quality, and security are also above average, a buyer can make a purchase in good conscience.

Having thought this through and put it down in writing, I now wonder how the results of the recent installer survey can be arrived at. Supposedly, more than half of all of the European installers are in favor of extending the MIP regulation if subsidies artificially hold down the price level of Asian products. That would mean that the majority of those surveyed are in favor of a worse cost-benefit ratio, take the risk of a greater chance of product failure, and are willing put their own existence on the line! Come again?

Overview of new price points for July 2016 with changes indicated:

Module Class	Price (€/Wp)	Change comp. with previous month	Description
High Efficiency	0.68	+1.5%	Crystalline modules 275 Wp and above with PERC, HIT, n-type or back-contact cells, or combinations thereof
All Black	0.56	+1.8%	Module types with black back sheets, black frames and a rated power between 190 Wp and 270 Wp
Mainstream	0.50	-2.0%	Modules typically with 60 cells, standard aluminum frame, white backsheets and 245-270 Wp, represents the majority of the modules on the market
Low Cost	0.34	-5.6%	Low-output modules, factory seconds, insolvency goods, used modules (crystalline), products with limited or no warranty

The prices shown indicate the average asking prices for duty-paid goods on the European spot market for the month of July 2016.

Author: Martin Schachinger, pvXchange GmbH

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July 2016: Pimp my PV

Module prices: New installations not on the cards? Then at least tune up the existing systems! Retrofitting storage systems to arrays is a lucrative business, as is site expansion.

The market for new systems in Europe has all-but flatlined, and slowly sinking prices of PV panels has done little to change that. But there is a way out! I'll get into that later. First, let's get back to price development: as indicated in recent months, prices for modules from Germany, Europe, Japan and Korea, as well as those from Chinese factories, are slowly converging toward the level of Southeast Asian modules, whereas prices for the latter seem to be set in stone. It's tempting to think that we've hit bottom; a market price that cannot go any lower.

That is not the case, but understanding why requires knowledge of what goes into the price index figures. The average values for Southeast Asian modules contain not only prices for Taiwanese, Vietnamese, and Chinese brands with local production facilities, but also increasingly prices for German brands produced in the region. Modules from German brands are usually offered at higher prices. These brands can also show up in several categories of the price index if the companies produce modules in both Europe and Asia. This can make market prices for Southeast Asian modules somewhat deceptive, whereas modules that are actually manufactured in Germany appear to get cheaper and cheaper.

The desolate state of the PV market is not likely to change anytime soon. Its fate has been sealed by, among others, members of government in Berlin who waved through a half-hearted revision of Germany's Renewable Energy Act (EEG) without any major opposition. One wonders why it is so hard for policy makers to back their own announcements and policies with a suitable legislative framework to ensure that the targets they have set can be met in the scarce remaining time available. Instead, they buckle in the face of the conventional energy sector and slow the pace of progress. The PV industry is once again confronted with the sad realization that the political will is lacking for a return to the expansion corridor of 2.5 GW per year in Germany.

Consequently, reactions to the revised EEG, which will take effect in 2017, have been mixed. A change that met with broad approval was improved support of tenant-PV models through the reduction of the EEG surcharge, which will pave the way for new business models. As anticipated, cuts in PV and wind power through expansion of the tender and a concurrent reduction of tender volume have been rejected.

What remains for PV professionals? If installed capacity cannot be increased significantly in the foreseeable future, solar professionals will have to resort to increasing the energy yield of existing PV systems. Existing systems represent a segment that goes well beyond simple service and maintenance tasks. Let's think about retrofitting storage systems, particularly for PV plants installed between 2010 and 2012 – a highly attractive business. In many cases, expanding systems is also worthy of consideration, particularly in areas where the grid connection capacity has not yet been reached and/or direct consumption is possible. Perhaps most promising is seeking out so-called distressed systems, and then repairing and optimizing them.

A distinction should be made between repowering and refitting. The latter describes the restoration of the proper, expected functionality; for instance, by reworking the substructure or wiring concept without interfering with the actual array capacity. If, however, aging modules and inverters are replaced by the latest high-performance models, this is repowering, a term borrowed from the wind industry. In the latter case, it is advisable to follow the letter of the law to avoid a potentially nasty surprise in the form of lost feed-in payments or even the withdrawal of a feed-in permit. There is still much to do, so let's get to work!

Overview of the newly introduced price points in June 2016 including changes

Module Class	Price (€/Wp)	Change comp. with previous month	Description
High Efficiency	0.67	+1.5%	Crystalline modules, 275 Wp and above with PERC, HIT, N-Type, or back -contact cells or a combination thereof
All Black	0.55	-3.5%	Module types with black back sheet, black frame and a rated power between 190 Wp and 270 Wp
Mainstream	0.51	0.0%	Modules with usually 6o cells, standard aluminum frames, white back sheets and 245 to 270 Wp; represents the majority of modules on the market
Low Cost	0.36	-5.3%	Low-performance modules, factory seconds, insolvency goods, used modules (crystalline), products with limited or no manufacturer guarantee

The prices shown reflect average asking prices for duty-paid goods on the European spot market in the month June 2016.

Author: Martin Schachinger, pvXchange GmbH

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June 2016: Waiting in vain

Module prices:Will the EU market revitalize itself? And if not now, when? The wait is interminable as installation figures and order volumes decline, and further strands tangle the China-Europe pricing impasse with each passing day.

Module prices from all regions and in nearly every product class are below those of the previous month, and it looks as if this trend will continue in June. An oversupply in the European market is gradually building, which is becoming apparent through price reductions on a broad front. Chinese suppliers are being proactive about influencing the market with the means at their disposal. On the one hand, inexpensive modules in ever higher performance classes are crowding in: 275-280 Wp 60 cell modules are no longer a rarity. On the other hand, polycrystalline products in the lower perfor-mance classes from China are increasingly finding their way to Europe. Their origin is no longer concealed, but listed in accompanying certificates of origin. Now that the EU Commission is also monitoring goods from China and Malaysia, this loophole is apparently no longer attractive. The Chinese have come to terms with the minimum price guidelines and are officially importing their products at the allowed prices. These modules are offered at far lower prices, as the continuous drops the average prices in our price index over the past two months shows.

What is the business model behind importing modules to the EU at above-market prices and then dumping them at a 20% discount? The EU Commission’s position on this practice is unknown. Small, unknown manufacturers have adopted this practice. The industry has settled down since the commission charged punitive tariffs to some of the big-name brands and tossed them out of the Undertaking. It is likely that the commission is preoccupied with reviewing the process and lacks the capability to look into new cases of circumvention. Or it could be that the commission has opted for a measured response to cases not involving high delivery volumes. The fear among installers and investors of being subject to retroactive punitive tariffs and the financial ramifications that may be involved is too great. Although we know of no cases in which buyers have been required to pay retroactively for properly taxed goods, as long as they were not the importers, there is always risk. The importers are often tiny Chinese companies with inadequate liability capital that are capable of rapidly dropping off the radar if necessary. Who can guarantee that customs authorities will not look to the next link in the supply chain whose assets they can get a hold of?

Module Class	Price (€/Wp)	Change comp. with previous month	Description
High Efficiency	0.66	-7.0%	Crystalline modules 275 Wp and above with PERC, HIT, N-Type or back-contact cells, or combinations thereof
All Black	0.57	-3.4%	Module types with black back sheet, black frame and a rated power between 190 Wp and 270 Wp
Mainstream	0.51	+2.0%	Modules typically with 60 cells, standard aluminium frame, white backsheet and 245-270 Wp, represents the majority of the modules in the market
Low Cost	0.38	+2.6%	Low-output modules, factory seconds, insolvency goods, used modules (crystalline), products with limited or no warranty

(The prices shown reflect average asking prices for duty-paid goods on the European spot market in the month May 2016.)

Author: Martin Schachinger, pvXchange GmbH

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May 2016: Scant cause for celebration

Module prices:Germany’s REA debate reloaded.

The current state of the European mar-ket offers scant cause for celebration. Following a somewhat lively first quar-ter compared with the same period last year, demand between mid-April and mid-May has apparently dropped off once again. The interest in PV installations is certainly present – what is lack-ing is decisiveness on the part of consumers and investors. Few new systems are being built and installers are turning to other business segments. Appar-ently there is little pressure to complete projects in the pipeline: FITs continue to be stable, at least in Germany. Numer-ous projects already planned are thus being pushed toward the second half of the year. Renewed uncertainty about the revision of the German Renewable Energy Act (EEG) and fear of retroactive cuts is one reason for this.

German Finance Minister Wolfgang Schäuble wants to eliminate the tax exemption for self-consumption of PV. The negative effects of the EEG surcharge on both PV installations and the imple-mentation of innovative direct market-ing concepts are still a bitter memory. The recent federal-state special summit on the EEG revision was initially unsuc-cessful because the individual positions were apparently too far apart. The public tender requirement for wind and PV applies to projects with 1 MWp of capac-ity and larger, although some would like to see the threshold set at 30 kWp, which would have catastrophic effects.

The progressive transition to the tender model is intended, among other things, to take the wind out of the Commission’s sails. Brussels wants to promote tenders in general rather than defined FITs. The EC has been torpedoing the EEG for years. Now the already hotly debated tax breaks in EEG 2012 have been identified as a form of anti-competitive state subsidy, which should have been subject to special approval by the EC. At the same time, the German government is promoting expansion targets for renewable energy that are tantamount to slamming on the brakes at a time when progress is already at a crawl. By 2025, the govern-ment is targeting 40-45% of generation from renewables. That means it is allowing a full nine years to increase the current share of 30-35% by just 10%. Because the last German nuclear power plant is scheduled to be taken offline by 2022, the remaining energy demand will be met with coal and gas-fired power plants or imports. While everyone eyes Berlin and Brussels with anticipation, France is releasing expansion targets for renew-ables. For PV, the plan is to more than triple installed capacity by 2023. The tar-get is 18.2 to 20.2 GW of total capacity. By 2018 there should be at least 10.2 GW of installed PV in France. This would corre-spond to an annual rate of 1.5 GW. There is also some positive news from IHS: Europe just hit 100 GW of installed PV capacity.

Module Class	Price (€/Wp)	Change comp. with previous month	Description
High Efficiency	0.71	-2.9%	Crystalline modules 275 Wp and above with PERC, HIT, N-Type or back-contact cells, or combinations thereof
All Black	0.59	0.0%	Module types with black back sheet, black frame and a rated power between 190 Wp and 270 Wp
Mainstream	0.50	0.0%	Modules typically with 60 cells, standard aluminium frame, white backsheet and 245-270 Wp, represents the majority of the modules in the market
Low Cost	0.39	+2.6%	Low-output modules, factory seconds, insolvency goods, used modules (crystalline), products with limited or no warranty

(The prices shown reflect average asking prices for duty-paid goods on the European spot market in the month April 2016.)

Author: Martin Schachinger, pvXchange GmbH

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April 2016: Turning the screw

Module prices: The PV industry still has not shaken off its winter slumber, and yet IKEA wants to take the market by storm.

Despite spring-like temperatures and snowless roofs, the solar market is still on ice this year. The installation figures in Germany, Italy and France lag those of previous years. Module prices, too, have scarcely budged. The price level of Chinese and Southeast Asian products has remained nearly unchanged since the beginning of the year, while European and Japanese module prices are converging slightly toward it. The new recycling directive taking effect may also be contributing to the market paralysis. Many market players are still undecided or even completely in the dark about what steps they have to take to be in conformity with the law. Unfortunately, the information policy of European lawmakers has left quite a lot to be desired in that regard.

It is likely, however, that the end to generous incentives in the U.K. will affect module availability and, therefore, the price level in the rest of Europe. Up to March, many deliveries still ended up on the island, creating a bottleneck on the continent, particularly with regard to products in the lower end of the market. But by April the U.K. effect should have tapered off significantly.  Currently, there is a steady demand for replacement modules, not least because many solar companies and large O&M service providers have started their annual maintenance and defective modules will have to be replaced. Many of the module types are no longer manufactured, however, and finding suitable replacements is not always easy. Although the relevant providers can often offer identical or very similar products in small quantities, when large quantities are needed sometimes the only option is complete replacement. The old modules that are still functional can usually be used elsewhere or sold.

Swedish furniture chain IKEA has now taken up the challenge of overcoming investment inertia among consumers. The Scandinavians want to become, in their own words, “the largest retailer of rooftop PV systems.” Initially the company will begin sales in the U.K, the Netherlands and in Switzerland. Later, the network of solar distributors  will be expanded to branches around the world. Industry insiders know all too well that such an undertaking is none too easy for a latecomer to the business. Some home and garden store chains – and just about all of the big energy companies – have already fallen flat or are tottering towards failure in the hotly contested small system segment, even though at first glance they appear to have a natural affinity to the PV market. But, as always, the devil's in the details, in the actual implementation, that is. We will have to wait in suspense to see what sort of disruptive concepts IKEA has up its sleeve to achieve this presumably impossible task.

“It will have to be a very simple, transparent sales process for customers, and has got to be affordable,” one observer said. Will PV kits be packed in portable boxes and deposited in the furniture warehouses, each package including the tools and generously illustrated assembly instructions with which IKEA customers are familiar? All too often, experience has shown that end consumers are better served when their PV systems are designed from the ground up by a professional solar company with components best suited to their needs. Package or complete systems – and DIY solutions, in particular – often involve unforeseen follow-on costs for retrofitting or rebuilding. The Scandinavians would be well advised to think long and hard about the undertaking and prepare as best they can for a complete entry into the solar market.

Module Class	Price (€/Wp)	Change comp. with previous month	Description
High Efficiency	0.69	-3.0%	Crystalline modules 275 Wp and above with PERC, HIT, N-Type or back-contact cells, or combinations thereof
All Black	0.59	-5.4%	Module types with black back sheet, black frame and a rated power between 190 Wp and 270 Wp
Mainstream	0.50	-0.0%	Modules typically with 60 cells, standard aluminium frame, white backsheet and 245-270 Wp, represents the majority of the modules in the market
Low Cost	0.38	+5.6%	Low-output modules, factory seconds, insolvency goods, used modules (crystalline), products with limited or no warranty

(The prices shown reflect average asking prices for duty-paid goods on the European spot market in the month March 2016.)

Author: Martin Schachinger, pvXchange GmbH

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March 2016: Trends in two directions

Module prices: Solar pioneers are being insourced by energy companies. Solar firms have begun reporting significantly better numbers.

Market sentiment in Europe appears to be looking up again for the first time this year. A contributing factor has been the very mild winter, which has already spurred the pace of installations in many parts. Note, however, that this is the big European picture. Germany, with its disappointing January and February figures, has yet to feel the effect of the upturn. Nevertheless, throughout Germany, the small and medium-sized system sector has been much livelier.

There is still a shortage of inexpensive modules in the European Union. Over all, the selection of modules has become very limited. Due to minimum import prices, which still apply, manufacturers are mostly only focusing on products with higher efficiency or smart junction boxes, such as with built-in module optimizers or other intelligent circuits.

Several solar companies have reported their annual sales figures in recent weeks. Once again, the figures are looking up when compared with the previous year, even for European companies. Thanks to a steadily growing global market, most manufacturers, system integrators and project developers did well. Last year also saw significantly fewer bankruptcies in the solar industry than in previous years. That is, of course, also due to the fact that the wheat has now been separated from the chaff.

The enormous losses these days are mainly being racked up at conventional energy companies because in that sector the restructuring has only just begun. To speed up the expansion of their renewable energy business, the major energy suppliers in Germany have been happily insourcing solar people and businesses, some of which are among the pioneers in the industry and until recently the staunchest opponents of the coal-nuclear lobby. But with the new outlook and a bit of sloganeering, all is right with the world, it would seem – beggars can’t be choosers. What does leave a bad taste in the mouth, however, is when these hastily greenwashed conglomerates act as if they had invented solar energy.

The question is whether it is really so simple to merge the old world with the new in the energy sector. PV, in particular, has always been a fast-moving business with ups and downs following in rapid succession. The business has always demanded imagination and flexibility – virtues which most would concede are hardly the strong suit of E.ON, RWE, and their ilk. There is a huge danger that many business models will be stifled by excessive bureaucracy and risk aversion, that speed and innovation will fall by the wayside, and that the veterans and founders of the solar industry will soon throw in the towel in frustration.

But maybe a fresh breeze will waft through the boardrooms of the power companies and their pure financial strength will be turned to the task of moving mountains.

Overview of price points – first time introduced in October 2015 – including changes:

Module Class	Price (€/Wp)	Change comp. with previous month	Description
High Efficiency	0.67	-2.9%	Crystalline modules 275 Wp and above with PERC, HIT, N-Type or back-contact cells, or combinations thereof
All Black	0.56	-3.4%	Module types with black back sheet, black frame and a rated power between 190 Wp and 270 Wp
Mainstream	0.50	-2.0%	Modules typically with 60 cells, standard aluminium frame, white backsheet and 245-270 Wp, represents the majority of the modules in the market
Low Cost	0.36	+5.9%	Low-output modules, factory seconds, insolvency goods, used modules (crystalline), products with limited or no warranty

(The prices shown indicate the average asking prices for duty-paid goods on the European spot market in the month of February 2016.)

Author: Martin Schachinger, pvXchange GmbH

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February 2016: A gathering storm

Module prices: New clouds are gathering on the PV horizon as difficult market conditions for modules persist, exacerbated by an unwieldy, if good-intentioned, take-back and recycling scheme.

In January, module prices of products from Asia climbed by a few percent age points across the board. Only the figures of the few remaining German and European products remained stable. The local market, mainland Europe at least, is still inadequately supplied with cheap modules. A disproportionate amount of goods are still ending up in the British Isles, where the last major projects are hastily being connected to the grid before the likely end to the free-for-all at the end of March.

The temporary boom in the U.K. has more or less singlehandedly brought the European market back to moderate growth following three years of decline. Still, at a growth rate of 15%, it lags far behind the global PV market; a market that grew by 25% in 2015 to more than 50 GWp of newly installed capacity. The German market, which has continued its slide,  accounted for just 3% of the total, or  1.5 GWp. No wonder Asian manufacturers continue to lose interest.

And as if that was not already troubling for German PV sellers and installers, yet another scourge befell Germany at the beginning of the year in the form of the amended ElektroG2 law or, at the European level, the Waste Electrical and Electronic Equipment Directive (WEEE). First came the punitive tariffs and minimum import prices for Chinese cells and modules, then mandatory tenders for ground-mounted systems, and now this new PV-blocking law.

What in theory is a well-meaning and basically welcome measure, a system for finan

cing disposal and recycling of electronic waste from the polluter with insolvency protection, has become a farce in practice. After the voluntary PV Cycle turn-in scheme failed to have the desired effect when nowhere near enough PV panel manufacturers signed on with that or similar services, a system has now been introduced that makes it possible to intervene right down to the level of the solar installer.

Installers are now responsible for organizing and financing the turn-in of all of the electronic devices they sell, unless otherwise arranged further upstream. Since 24 October 2015, not only inverters but also PV modules have been subject to the new regime; on 1 February the transitional period ended for the registration of all brands and products offered for sale.

What that means for the individual stakeholders is difficult to predict. Although it is always possible to study the legislation, and there is now plenty of informational material (e.g. from the German Solar Industry Association, or BSW), there is still plenty of room for interpretation, and finding qualified independent expertise is not easy. At the moment, there is just too little experience with the actual feasibility of implementation and the consequences of ignoring the rules. There is also too much chaos surrounding the EAR Foundation, the body responsible for product registration and administration of financial guarantees. Applicants sometimes wait months for a registration number, which is technically required now before goods can be brought to market.

In early February, of the hundreds of brands and products currently on the market, just 50 were officially registered. Mostly Japanese and European manufacturers with generally higher-priced products can boast a registration number, while their Chinese and Southeast Asian counterparts probably do not know or want to know about their “good fortune”. To top off all this nonsense,  each member of the EU wants to implement its own national system for return and recycling. The likely outcome is that further international manufacturers will pull out of the EU market, causing the price level to rise again in 2016, particularly if the cost of the newly organized system is transferred to products.

Overview of the newly introduced price points in January, including changes:

Module Class	Price (€/Wp)	Change comp. with previous month	Description
High Efficiency	0.69	-1.4%	Crystalline modules 275 Wp and above with PERC, HIT, N-Type or back-contact cells, or combinations thereof
All Black	0.58	+1.8%	Module types with black back sheet, black frame and a rated power between 190 Wp and 270 Wp
Mainstream	0.51	+2.0%	Modules typically with 60 cells, standard aluminium frame, white backsheet and 245-270 Wp, represents the majority of the modules in the market
Low Cost	0.34	-8.1%	Low-output modules, factory seconds, insolvency goods, used modules (crystalline), products with limited or no warranty

(The prices shown indicate the average asking prices for duty-paid goods on the European spot market in the month of February 2016.)

Author: Martin Schachinger, pvXchange GmbH

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January 2016: Suspension during review

Module prices: While the European Commission continues its review of anti-dumping measures put in place, market restrictions should be suspended in order to offer further protection against the PV industry.

Once again, December scarcely saw any changes in module prices over the previous month. The downward movement of prices for Japanese and Southeast Asian goods is marginal at best and is no indication of a trend. To the contrary, as January approached, the price of most of these modules increased following the sell-off of a few remaining warehouse stocks at bargain prices. Considered over the year as a whole, there seems to be no momentum to price development. Price stability within Europe is paralyzing the market and can be traced directly to regulation by the EU commission, which is an essential contributing factor to the European market finishing below the previous years' level for the fourth year in a row in 2015.

Until now, the PV industry has unquestioningly been gnashing its teeth over the fact that minimum import prices have remained in place during the ongoing review of anti-dumping measures. However, a statement by the British energy minister has brought a breath of fresh air to the debate. She has called for a moratorium on the undertaking and collection of tariffs during the review process. Unlike the German federal government, she is taking a clear stand against existing market restrictions.

The question of why the applicable market controls have remained in place during the EU commission’s review process is certainly justified. If, for instance, the EU concludes after a couple of months that the market restrictions for Chinese products are unjustified, it will be almost impossible to compensate for the damage to society and the PV industry caused by the inflated prices. Let us briefly recap the background and rationale of the anti-dumping process:

“Dumping: a product is considered to be dumped if its price when exported to the Community is lower than the comparable price of a like product in sales in the course of ordinary trade in the exporting country (normal value).” In this particular case, what that means is that a dumped cell or module generally has to be sold at higher prices to customers within China than to consumers in the EU. This is demonstrably untrue.

“Subsidy: the presence of a subsidy is assumed when the government in the country of origin or exporting country offers a financial contribution or any form of income or price support for the manufacture, production, export or transport of any product.” This is true for manufacturers in China and the EU alike.
“Damage: it must be determined that a branch of industry in the Community is materially damaged or threatened with damage, or that the establishment of a branch of industry in the community is significantly delayed.” A decrease of production capacity within Europe was observed, but was partially compensated for by investments from Asia and the establishment of local production facilities. On the other hand, even in China, manufacturers unable to withstand competition have had to file for bankruptcy.

“Causal link between dumping and injury: there must be a direct causal link between dumping and the observed damage.” For this to apply, we would have to have observed unmistakable dumping and a market collapse even before the introduction of market restrictions. There was certainly a consolidation, but due to the extraordinary number of independent manufacturers, it had been expected for quite some time. A very clear market collapse did not come until 2013, the year the protective tariffs went into effect.

“Community interest: the introduction of an anti-dumping or countervailing duty must be in the interest of the Community. In this case, the EC Commission has to strike a difficult balance of interests: the core issue is whether the interest in imposing a punitive tariff of the producers filing the complaint outweigh the damage to importers, industrial processors and possibly consumers arising from the imposition of anti-dumping or countervailing duties.” Comprehensive damage to the overall market is assumed and can only be refuted with evidence to the contrary.

Advocates of the market restrictions often deny that the demise of the European PV industry has anything to do with punitive tariffs and minimum import prices. The only way to prove this contention is to lift the restrictions immediately and wait to see what happens. If nothing happens, and growth in installations continues to fall short of the policy volume targets, advocates of the restrictions will be justified, and the market will have to be stimulated with other measures. If installation figures see a sharp rise, however, and a burgeoning market develops over the course of the year, this indicates a causal link between the lifting of the restrictions and the market recovery. Let's let the market decide.

Here is an overview of new price points introduced in December, including changes:

Module class	Price (€/Wp)	Change comp. with Previous month	Description
High Efficiency	0.70	+ 2.9%	Crystalline modules 275 Wp and above with PERC, HIT, N-Type or back-contact cells, or combinations thereof
All Black	0.57	0.0%	Module types with black back sheet, black frame and a rated power between 190 Wp and 270 Wp
Mainstream	0.50	+ 2.0%	Modules typically with 60 cells, standard aluminum frame, white backsheet and 245-270 Wp, represents the majority of the modules in the market
Low Cost	0.37	0.0%	Low-output modules, factory seconds, insolvency goods, used modules (crystalline), products with limited or no warranty

(The prices shown reflect average asking prices for duty-paid goods on the European spot market in the month of December 2015.)

Author: Martin Schachinger, pvXchange GmbH

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December 2015: It could have been easier

Module prices: As the year draws to a close, there has been little movement in module prices. A slight bottleneck in polycrystalline standard modules noted in November failed to lift prices, counteracted by the usual clearance sales in December.

Overall, prices across nearly every region of origin have ended up at the level they started 2015. At the same time, feed-in tariffs – at least in Germany – came down considerably over the same period. Degression was not halted until October when the so-called breathing cap began to take effect. Accordingly, the monthly installation figures in Germany remained below the 100 MW mark.

And now it is official: import restrictions on Chinese cells and modules will not be lifted anytime soon. The EU Commission has finally taken up a protracted review process for anti-dumping and anti-subsidy measures, which will likely result in a price freeze for a further 12-15 months. As expected, the EU Prosun association requested this review, forcing the commissioners to initiate the process. Only a veto from policy makers could have prevented this procedure, but it never came.

Had the protective tariffs, and thus the minimum prices and quantity limitations specified in the Undertaking been laid to rest on December 7, life would have been much easier, at least for the vast majority of players within the European PV industry. The time-consuming review of certificates of origin of all the products imported into the EU and the associated delays would not have been necessary. Faster processing of all imports and reliable delivery data on delivered quantities and arrival dates would in turn increase planning security.

Although the expected module prices in the lower 40-euro cent range would put European manufacturers under pressure, SolarWorld and its associates demonstrated in mid-2015 that they can keep pace with prices under 50 euro cents. Not long ago, pv magazine raised the question of whether modules for projects could be produced for 41 to 45 cents without subsidies. Outside the EU, and other regulated markets, Asian modules from leading manufacturers have already been easily available at these prices for some time. Overall, a significant market recovery would be the result, particularly in the industrial and large-scale project segment. Dealers and installers could once again achieve satisfactory margins with solar panels, which is nearly impossible at present.

Unfortunately, we have missed the boat on this opportunity. As such, we can look forward to another year of sideways cell and module prices linked to the minimum import prices of Chinese products. For many Chinese manufacturers, the undertaking has proved more a burden than an opportunity, however, especially where larger production capacities outside of China had already been developed. Distrust and constant monitoring by the EU Commission have also complicated the sale of non-Chinese products in the EU. Recently Trina Solar has bid farewell to the Undertaking, and other manufacturers are sure to follow. Since Chinese products can no longer be sold here anyway, their producers are not bothered by the punitive tariffs. Guarantees of origin have to be provided already for non-EU products entering the EU anyway.

The question remains whether under the current circumstances all of the German projects awarded in public tenders can actually be implemented. Many companies certainly speculated on the elimination of minimum import prices at the end of the year when they submitted their bids. But with the unchanged price level expected in 2016, some large-scale plants will likely be uneconomical, unless SolarWorld jumps into the breach with prices, a move sure to spark talk of dumping.

Last but not least, what follows is an overview of new price points introduced last month, including changes:

Module class	Price (€/Wp)	Change over prev.  month	Description
High Efficiency	0.68	– 2.9%	Crystalline modules 275 Wp and above with PERC, HIT, N-Type or back-contact cells, or combinations thereof
All Black	0.57	– 3.4%	Module types with black back sheet, black frame and a rated power between 190 Wp and 270 Wp
Mainstream	0.49	0.0%	Modules typically with 60 cells, standard aluminum frame, white backsheet and 245-270 Wp, represents the majority of the modules in the market
Low Cost	0.37	– 5.1%	Low-output modules, factory seconds, insolvency goods, used modules (crystalline), products with limited or no warranty

(The prices shown indicate the average offer prices for duty-paid goods in the European spot market in the month of November 2015 again.)

Author: Martin Schachinger, pvXchange GmbH

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November 2015: What's Germany's Energiewende really all about?

Module price index: With module prices flat in Europe, pvXchnage takes aim at the double standards at play at the heart of Germany's Energiewende.

There were not many surprises in last month's market and module price development. With broadly stable prices, the markets in Germany and Europe saw, at best, a slight improvement from September to October, but on the whole it is still at a disappointing level. I'll take this state of affairs as an opportunity to look into the reasons for why the current market is in such a state and not faring better. This is not an especially difficult exercise. Once again we are getting a lesson these days from the big policy makers in what the new energy economy is all about: cold-blooded power and big business politics at the expense of the consumers and taxpayers.

Billion-euro lawsuits or threatened legal actions from nuclear power companies, forced gifts and subsidies to coal power plant operators, years of fraudulent behavior in connection with emissions limits – this is the dire news of the shameless business practices of some of Europe's biggest corporations that has been dominating the headlines over the past few weeks.  Meanwhile, we stare dumbfounded at how the expansion of renewables falters and how the introduction of environmentally friendly vehicles is undermined. Is that the necessary course of the energy transition, or is this about profits for large-scale investors and power structures?

Other countries have long since passed Germany by and are setting the example for how committed green energy policy is done. Officials in Chile have now confirmed that PV power is the cheapest source of electricity in the country. As such, the country is promoting efforts to decommission fossil fuel based power plants and break its dependence on energy imports by building ever more PV systems and not strangling the market. Here in Germany, across all of the political camps the support for a transition to a renewable source of energy unanimous. The trouble is that none of them can decide which source that should be and how fast the transition ought to take place.

Catering to the conventional energy industry seems to know almost no bounds in Germany. The influence of the “Big Four” utilities is apparently still too strong. Flying in the face of reason, admissions are being made that will end up costing of us huge sums of money, which will no longer be available for the expansion of renewable energy. The latest act of bungling is the multi-billion euro payouts the big energy conglomerates are collecting for reserving capacity from coal-fired power plants that are actually already supposed to be switched off.

And the debate is still raging over who will pay the horrendous costs associated with the government plan to drop nuclear energy, the taxpayer or the utility customer! And how is this, despite years of massive profits at every one of the big energy companies, even possible?

At the same time, the government passes out gifts to the deeply entrenched energy industry; it has announced a rise in the renewable energy surcharge. Of course, consumers are not happy. Ever-rising electricity costs are all the fault of renewables, right? What else could it be? Nonetheless, in January 2016, feed-in tariffs for PV power fed into the grid will not likely be lowered again, but rather remain at the December level. This is the result of low installation numbers over the past few months and is long overdue. The idea that this could revitalize the market in some way is highly doubtful, however. The level is simply too low to produce acceptable returns at current system prices.  That is why within the ranks of the solar industry, there is already talk of eliminating the renewable energy act to put an end to the counterproductive effect of the renewable energy surcharge on the overall market, and thus boost the image of renewables.

Elimination of import restrictions on Chinese solar panels and cells, which would bring PV panel prices down by some 20%, could have a really positive effect on market development. But even on this issue, the German government is highly indecisive. The current attitude can be summed up as: “We have other problems right now and have no desire to take up this issue yet again. Why don't we just leave well enough alone.” A group or EU parliamentarians in Brussels spanning a number of different factions has shown much more foresight on this issue and has called for a quick scrapping of the trade restrictions to save the solar industry. If only this call would be heard!

The bottom line is that the transition to clean energy cannot be achieved by throwing money at energy conglomerates or preventing the import of important environmental technology. The politics of empty promises and misdirected efforts is a policy that leads only to undershooting our own targets. What we need now is an urgent change of course in the direction of responsible support of the only sustainable energy source and its intelligent use. If we fail to do this, the formerly touted energy transition that won international recognition for Germany could end up making the country an international laughing stock. To put it in the words of our Chancellor: We can do it!

Last but not least, below is an overview of the new price points for last month, including changes:

Module class	Price (€/Wp)	Change rel. to prev. month	Description
High efficiency	0.70	+ 1,4%	Crystalline modules to 275 Wp with PERC, HIT, n-type, or back-contact cells or a combination thereof
All black	0.59	0.0 %	Module types with black back lamination, black frame, and a nominal capacity between 190 Wp and 270 Wp
Mainstream	0.49	– 3.9 %	Modules that usually have 60 cells, standard aluminum frames, white back lamination, and 245 to 270 Wp; the majority of modules on the market
Low cost	0.39	+ 2.6%	Low-output modules, factory seconds, inventory liquidation, used modules (crystalline), products with limited or no manufacturer warranty

(The prices shown represent average asking prices for taxed goods on the European spot market for the month of October 2015.)

Author: Martin Schachinger, pvXchange GmbH

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October 2015: New criteria, stable prices

Module price index: pvXchange has altered the criteria for its October module price index to reflect European market pricing. There has been little movement of late.

In September, the PV markets varied very little over the previous month and module prices from all regions changed only marginally. Fluctuations in one direction or another will mostly be smoothed out again in October. Downward price adjustments that would favor of a revival of the PV market are virtually impossible for most producers due to EU Commission restrictions. Inexpensive products are becoming increasingly rare in Europe due to more stringent controls.

The limited supply of factory seconds and insolvency goods continue to be shunned by many investors for their lack of quality certificates and warranties. The same is true, unfortunately, of used modules in particular, which – if tested and from a well-known manufacturer – certainly can be an alternative to expensive new products.

But this market commentary is not primarily concerned with price development and the events in the market, but rather on changes in the offing to the price index itself. These changes are necessary because sorting out offered prices by the selected regions has become increasingly difficult in recent months, such that the results are only partially representative. The separation according to production regions is no longer as relevant, because the remaining module production facilities in Europe are increasingly operated by corporations of Asian origin, whereas many European PV manufacturers now produce in Asia, or at least buy a large part of the raw materials there.

Examples include the formerly European manufacturer (Hanwha-) Q-Cells, REC, Solon and Axitec, which produce their panels exclusively in Asia, whereas Jinko Solar, Renesola, BenQ and Astronergy operate manufacturing facilities in Europe, even though their parent companies are located in Asia. Original Chinese brands are even more confusing with module declarations of origin listing a country in Southeast Asia or a name suggesting that they are not a Chinese company – Canadian Solar or Amerisolar are good examples.

In coordination with pv magazine, pvXchange has therefore decided to revamp the module price index. In the future, the price survey will be performed in light of manufacturer developments in recent years. In the future, more weight will be given to the technology used or to product quality, rather than the supposed origin of the products. This approach also makes price differences easier to understand and puts them outside the influence of politically prescribed market restrictions.

Effective immediately (Oct 2015), average prices in the European market for the following module classes will now be surveyed:

Module Class	Price (€/Wp)	Description
High Efficiency	0.69	Crystalline modules 275 Wp and above with PERC, HIT, N-Type or back-contact cells, or combinations thereof
All Black	0.59	Module types with black back sheet, black frame and a rated power between 190 Wp and 270 Wp
Mainstream	0.51	Modules typically with 60 cells, standard aluminum frame, white backsheet and 245-270 Wp, represents the majority of the modules in the market
Low Cost	0.38	Low-output modules, factory seconds, insolvency goods, used modules (crystalline), products with limited or no warranty

With this new classification scheme, there will still be no distinction made between mono and polycrystalline modules, as I have not observed any significant price differences in this respect. The only decisive factors in the sale price are demand, availability and module efficiency. Thin-film technologies are still not taken into account because there is still too little supply on the European market for a representative survey.

The price survey and presentation for the above-mentioned types will take place concurrently with the region of origin categories, effective immediately and to the end of the year. If this new price break-down proves itself, it will replace the old one completely in the coming year. Since the selected performance classes that define the price groups are subject to technological development, they will be reviewed periodically and adjusted as necessary.

Overall, the expectation is that the new price index will better serve the information needs of readers and users, even if it is no longer much good as a reference for checking the minimum import prices. But that chapter will soon be behind us anyway!

Author: Martin Schachinger, pvXchange GmbH

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September 2015: Positivity and conflict