PVSEC 2011 - Another trade show, another drop in module prices?

While prices are declining for modules, the industry is expected to level off with increased demand in the fourth quarter of 2011.

Jemma Davies, Research Analyst, IMS Research

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Arriving at PVSEC on the first day of the exhibition, I couldn’t help but notice the stark difference to Intersolar Europe, just three months earlier. Although both PV exhibitions were in German cities, the atmosphere at the two shows could not have felt more different.

Despite the uncertain market conditions at the time, June’s Intersolar Europe had a vibrant atmosphere, with halls filled with extravagant booths and lively music. On the other hand, suppliers at PVSEC seemed downbeat and the halls seemed comparatively quiet, with some major suppliers noticeably absent.

There was however a common talking point amongst the people attending both exhibitions – module prices.

At Intersolar Europe there was constant talk of module prices falling and following the show they dropped at an alarming rate, the result of perhaps a self-fulfilling prophesy. These rapid price declines were attributed to suppliers attempting to clear inventory which had risen sharply following a sudden collapse in demand in the Italian market.

Similarly, at PVSEC reports that module prices were rapidly falling were fuelled by a new ‘lowest price’ being heard almost hourly. Some smaller Chinese suppliers admitted to us that they were selling modules below cost in an attempt to generate better cash flow. These prices are clearly unsustainable and not necessarily indicative of module prices on the whole. However, the danger is that by the time that the aggressive price reductions of a select few companies had spread throughout the exhibition halls, perceived industry average prices had been pushed downwards. Consequently, other suppliers may be forced to reduce prices further in order to appear competitive and prices could be forced into another downward spiral, similar to that seen after Intersolar.

In my opinion, with the exception of the sharp declines seen at PVSEC (and possibly immediately after), we will see module price reductions slow in the remainder of 2011. Current price levels for modules (and cells and wafers) are already unsustainably low, which makes further declines very difficult. Prices are also likely to benefit from demand returning in the fourth quarter.