Falling Silicon and Solar PV system prices... More to come...

BB.

Well, you can always count on the "FuturePundit" to report and predict raw silicon and final solar PV system prices...

In a comprehensive report on the subject this morning, Collins Stewart solar analyst Dan Ries notes that spot market poly prices have fallen from a peak of about $450/kg in mid-2008 to the $130-$150/kg range more recently. That’s a pretty dramatic move - but the decline is far from over.
Ries contends that spot prices by mid-2009 will plunge to the $40-$60/kg level, due to a severe oversupply.
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The silver lining here is that in the long run, much lower prices for polysilicon are the most direct way to bring down solar electricity production costs low enough to compete with conventional utility scale power generation. With poly in the $40-$60/kg range, he says, module prices would drop to the $1.70-$2/watt range, and utility scale projects could produce power for 11 cents/watt. At that rate, he says, solar would be “reasonably competitive” with combined cycle natural gas facilities and wind turbines.
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Analysts at HSBC forecast average selling prices for solar systems will drop by about a fifth in 2009 given oversupply and a tighter credit environment, but prices for cells and modules have so far fallen much faster than those for silicon and wafer.

-Bill

Windsun

Re: Falling Silicon and Solar PV system prices... More to come...

Not sure I buy into all of his predictions though - or at least not the amount of drop.

The large price drop in Silicon do not translate on a 1 to 1 ratio with finished panel prices, even though they are the most expensive part. Fortunately, other prices - such as Aluminum, copper, and most other things that go into a panel have also been dropping, though not as much.

While there might possibly be a 15-20% drop in panel prices, I don't go along with his prediction of a 20% drop in system prices. One big problem though is that if panel prices drop 20%, that means that almost none of the pv manufacturers will be able to make a profit, which means that some are sure to go out of business - thus starting the 2nd round of panel shortages in another couple of years. (assuming the economy does not totally crash and burn).

Cariboocoot

Re: Falling Silicon and Solar PV system prices... More to come...

Plus there is the market balancing factor: as prices go down, more people will want to buy thereby increasing demand and pushing prices up.

For consumers, the only thing that counts is what you actually see at the retail level.

Windsun

Re: Falling Silicon and Solar PV system prices... More to come...

Cariboocoot wrote: »

Plus there is the market balancing factor: as prices go down, more people will want to buy thereby increasing demand and pushing prices up.

Normally, yes.

But one thing that has really been hitting the grid tie market right now, especially in California, is that a lot of them were financed with 2nd mortgages or home equity loans.

But now that the price of those homes has dropped 15 to 25%, those loans are no longer available. So far this year we are selling more off grid systems than grid tie, but with winter weather hard to draw any real conclusions this early in the year.

System2

Re: Falling Silicon and Solar PV system prices... More to come...

Cariboocoot wrote: »

Plus there is the market balancing factor: as prices go down, more people will want to buy thereby increasing demand and pushing prices up.

You mean just like with hand calculators, CD players, TVs, airline tickets, and I-Pods?

I understand the "theory" of classic market economics, but the reality is the more you make the cheaper they get.

. . . and the cheaper they get, the more you make.

niel

Re: Falling Silicon and Solar PV system prices... More to come...

that's not quite 100% true in the case of pvs as they have a high cost in the making of them that doesn't go away with high volume sales. what you are seeing isn't all just bumped up because of the lack of higher sales as was primarily the case with calculators and vcrs and dropping the price would be cutting the manufacturers' own throats until cheaper ways of making them while retaining quality come to be.