With the introduction of the New Deal for photovoltaics known as the 'Industry Emergency', the Chinese government has significantly reduced its policy support for the deployment of solar energy. Bloomberg New Energy Finance (BNEF) anticipates that the entire solar energy value chain will be affected. BNEF forecasts China's polysilicon solar module prices in 2018 Will drop 34%.
This is equivalent to the decline in the price of components in 2016. The decline in solar modules only reached 40% in 2011.
Since China is by far the world's largest solar energy market, it is expected that this situation will spread throughout the world. BNEF said, 'The biggest reason is that oversupply is universal.'
In the fourth quarter of 2017, BNEF's benchmark single crystal silicon module price was US$0.37 per watt, and it is expected that by the end of this year, the price will drop to US$0.24 per watt, including 16% VAT in China.
Supply chain dilemma
BNEF predicts that there will be a 'market panic' in the short term and that developers will stop installing in the third quarter while waiting for new quotas and the release of cheaper module prices.
For the supply chain, the sudden stop of the impact on the Chinese market is obvious. BNEF expects this will lead to 'increase in inventory'. According to preliminary statistics in May, a large amount of polysilicon film has been backlog. The recent slowdown in demand is expected to further Deteriorating the market.
Due to the inflexibility of the material production equipment, BNEF believes that the impact on polysilicon is the most serious and it is expected that the price will fall to 11-12 US dollars per kilogram by the end of the year. However, slowing demand will also affect non-silicon materials.
This, in turn, will reduce the price of module production, and BNEF expects that the module's production cost under the 'best practices' model will be reduced to 0.24 US dollars per watt, leaving very modest profit margins for module manufacturers. However, some large-scale Chinese PV manufacturers already expect to reduce their costs below these figures in the first half of 2019.
Article 201
The impact on the U.S. market is not yet clear. However, given the global oversupply situation, if the prices of PV in South Korea and Southeast Asia fall, the effect of the 30% tariff in Article 201 will be even smaller because the import tariff is calculated as a percentage of the module price.
Being sensitive to price for development, this will stimulate more project development, especially in utility scale sectors that are obstructed by Section 201. But continued low prices will also impact the profit margins of new plants being planned, including those in Georgia. Hanwha's 1.6 GW new plant plan and First Solar's 1.2 GW expansion in Ohio.
However, given that the product may be used to supply the company with NextEra's 2.75GW supply agreement, JinkoSolar's Jacksonville plant may be less affected. Similarly, the Tesla/Panxia super factory in the north of New York City Global prices are more isolated because it produces solar roofs and HIT modules that are high-end products whose prices are less sensitive to market prices.
