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Big Solar Energy Price Declines Expected

Post Time:Nov 07,2008Classify:Industry NewsView:379

Tired of waiting for solar photovoltaics costs to finally drop? Looks like the wait is almost up. Average Selling Prices (ASPs) of solar photovoltaic modules are expected to decline 20% in 2009 and 25% in 2010.

After subsidies, Plan B for module makers is to sell products at a discount to keep inventory moving. It helps that manufacturing costs continue to decline about 10% each year, thanks to design improvements and benefits of scale. But it seems a little coincidental that most solar companies happened to predict the ASP for their products will decline at the exact same rate.

Analysts from Deutsche Bank (nyse: DB - news - people ), UBS (nyse: UBS - news - people ), Hapoalim Securities and Goldman Sachs all reached a different consensus, namely that ASPs will need to decline closer to 20% in 2009 to absorb excess inventory, and as much as 25% the following year.

The credit crunch is cutting demand for solar power.

Commerzbank said the impact of tougher financing conditions would affect returns seven times more than would module prices. It puts next year's financing needs for global photovoltaic projects at 33 billion euros, of which 20 billion would need debt financing.

But all indications pointed to a near halt in debt financing for large-scale solar power parks outside Germany, Commerzbank added, which would last until at least the second quarter of 2009.

The credit crunch will also cause delays and cancellations of new solar photovoltaic manufacturing plants. That will tend to boost prices by reducing future supply.

First Solar and some of the PV manufacturers are claiming costs much lower than current prices. As production capacity expands the prices should drop down closer to manufacturing costs.

Source: FuturePunditAuthor: shangyi

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