Solar module prices may approach the threshold of $0.10/W by the end of 2024 or eventually in 2025, according to Tim Buckley, director of Australia-based think tank Climate Energy Finance (CEF).
“This would be nicely ahead of Dr. Martin Green’s $0.10/W by 2030 forecast made three years back,” he told pv magazine, adding that he came to this conclusion after estimating that new annual PV additions may reach between 600 GW and 1 TW already by the end of this decade. “I am very bullish on the rate of global growth in solar installs over the next few years. Putin’s invasion of Ukraine has reminded everyone of the need for supply chain and energy security, particularly in terms of imported energy reliance.”
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Buckley also noted the likely new climate accord by Chinese President Xi Jinping and US President Joe Biden, might see a formal call for a tripling of renewables capacity globally by 2030.
“At a time of massive capital investment cost blowouts, to be able to invest in deflationary solar is a massive global boon that will provide cost of living pressure relief as well as improved energy security,” he said.
Overcapacity issues
Buckley said price pressure will increase due to the staggering capacity increases announced by the PV industry at the global level, although he questioned a recent forecast by the International Energy Agency (IEA) in its recent World Energy Outlook 2023, which claimed thaT the world's cumulative installed solar capacity could reach 2 TW by 2025.
“I find the IEA assumption that the Chinese will run their brand new factories just 35% of the time as ludicrous,” he added. “As this new capacity is brought online for a full year, I would expect the IEA figures to be undercooked by over 50% in terms of global annual solar installs.”
Buckley estimates that solar module prices will end up dropping by 40% this year.
“This will give many investors in the US, India, EU and China good reasons to pause or rethink their financial assumptions that underpinned their announcements of massive capacity expansions,” he said. “Against this, both the US and India have 40% solar module import duties against Chinese products, so they are largely insulated from excessive price competition, and share the cost savings of the 70% decline in polysilicon price over the last year as well.”
Rapid deflation and excessive price pressures, on the other hand, may soon lead to the closure of old technology, sub-scale solar manufacturing facilities, both in China and globally.
“Old facilities simply can’t compete with the scale advantages nor the new technology investments of the world leading firms in this sector, almost all of which are Chinese,” said Buckley.
New cycle
Describing this new industry cycle for the solar PV technology, Buckley said it is different from previous ones, as solar is now the cheapest electricity, which is disrupting incumbent industry competitors.” This means finance will rapidly flee from investing in any new thermal power capacity in the electricity sector globally,” he said.
The analyst is convinced that finance won’t just flee for environmental, social and governance (ESG) issues or moralistic or climate reasons, but it will flee nonetheless because it will not provide new financing to inevitably stranded assets, particularly with the concurrent rapid scaling up of battery energy storage and EVs.
“This time is different because of the convergence of power-industry-transport markets,” Buckley said.
Tim Buckley is the main author of “Solar pivot: A massive global solar boom is disrupting energy markets and speeding the transition,” which was published by CEF in June. There, Buckley and his colleagues said they estimated solar electricity costs to drop 10% annually for the rest of this decade, halving by 2030. The report also provides detailed information on the operating and planned capacity of the global PV supply chain.
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Is he just talking manufacturing costs? I’ve been shopping for a solar energy system for my house for a little over two years and so far the best deal on panels I’ve seen was a clearance pallet of a last year model that was about 4500 bucks for 10kw worth of panels, which is 45 cents a watt… What kinda delusion is this person living in thinking that’s dropping to 10 cents this upcoming year for new panels?
Hey David, it’s always about the wholesale prices and not the retail prices.
Current wholesale prices are here in Europe (Rotterdam) in the range of 0,16-0,18€/Wp with Jinko/Ja/Trina/etc.
Hello William
Due to new technologies and development it’s possible like 12 cent pw
He’s talking wholesale to large power producers. A buddy of mine works on some multi-million dollar installations (i.e. 200 million dollars plus) and they are already getting them for 17 cents a watt.
I think you are talking about the system cost including wiring racks inverter and all the transportation cost, while he is talking about pure module price out of factory
4500 $ for 10kW!!! This is ludicrously cheap already! If this includes installation costs, inverter setup and solar controller, wires and of course the minimum 15 dollars per hour salary, this is really good price! For the same, in Finland, it is demanded about 14k+…which means, that you are already in the sweet spot. In the future, if the production cost falls 40 percent, this certainly means that the retail price will drop about 10-15 percent, which is already a good bonus
David Williams,
As a solar installer, there is a big difference between mfg. cost in China and retail cost after duties, markup and shipping in the U.S. 13 years ago when I started my costs to buy were $2/watt, now they are in the mid .30’s, Whatever the number is there is a huge glut of solar panels worldwide and prices are coming down for many reasons. Total install cost of course includes a lot more items, such as inverters, electrician, permits, racking, labor, profit…
I hope this comes true
This would be great if anywhere near that price was available to retail consumers. This only applies to large scale projects by utilities. For the average Canadian or American, you’re looking at 5 to 10 times that price.
Individuals would love to switch to solar, but the initial casts are still so high. Let’s see $.20 for retail and I bet you would see it take off.
The IEA have always been absurdly conservative in their estimates of solar costs and instals. So anything they say, it’s safe to add 50% to the amount of annual installs they predict. Ramez Naam did a great summary of their earlier predictions on his blog. Worth searching for.
The prices of Solar PV falling is good sign – but the cost of Labor is increasing for EPC. So for quality installation and services, EPC must increase their margins to sustain. There should be emphasis on using quality material, material handling systems for handling large modules and cleaning systems – especially in countries like India where a lot of quality is compromised to provide cheap systems due to high competition.
The cost of solar panels has gone down a lot in the last ten years, and the technology has gotten better. As my colleague pointed out, it was customary to pay a sum of 2.5 USD or more per Watt. Today, we are on a completely different level. Economy of scale, technological development in components and manufacturing, and government support (especially in China) have made it possible to produce electricity with renewables that is cheaper than electricity made with classic fuels.
The prices published or referred to are usually prices relevant for multi-million USD photovoltaic installations. However, we currently see prices at around 0.10USD/W – 0.14USD/W for N-Type FOB 40″ CN from Tier-1 manufacturers. If we take a look at Europes biggest spot market for solar products we see prices around 0.12 EUR/W – 0.14 EUR/W EXW EU for 40″ and sometimes we spot deals on solartraders.com which are around the same price but for much lower quantities.
Nonetheless, the market scenario in Europe is markedly distinct from that in the United States, as there is no import tax, and the demand has been constrained. So many sell below cost price at the moment.