Crystalline PV module profits fall to single digits

Average gross profits of crystalline photovoltaic (PV) industry module manufacturers fell to just nine U.S. cents per watt in the first quarter of 2012.

06/26/2012


Average gross profits of crystalline photovoltaic (PV) industry module manufacturers fell to just nine U.S. cents per watt in the first quarter of 2012, putting huge pressure on suppliers according to the latest quarterly report from IMS Research, recently acquired by IHS Inc. As a result of continued price pressure and highly competitive market conditions throughout the PV industry, gross profits are forecast to continue to fall further to just seven cents per watt by the end of 2012.

The latest report from IMS Research revealed that following a year of rapid price declines, when average crystalline PV module prices fell by nearly 50%, industry gross profits fell below $500 million in Q1’12, the lowest level since 2008 and more than 75% lower year-on-year. The cause of this rapid deterioration is simply due to costs not falling as quickly as prices. Whilst average crystalline PV module prices fell by $0.67/watt in 2011, average costs per watt reduced by just $0.42.

“Profit margins have been the victim as suppliers have been forced to engage in a fierce price war and have reduced prices faster than they have been able to reduce their costs,” commented senior market analyst Sam Wilkinson. “High inventory levels, weak demand and reduced government support for PV have all contributed to a rapid downward spiral for PV module prices.”  

The narrowing gap between prices and costs has resulted in the average gross profit per watt of crystalline modules falling from $0.39 to just $0.09 in one year. One key reason that suppliers have been unable to reduce their costs quickly enough is that average polysilicon prices have not declined as quickly as module prices.

“Although spot prices for polysilicon have quickly fallen over the last year, a large proportion of polysilicon is purchased under long-term agreements, and it has taken some time for suppliers to cancel or renegotiate supply contracts in order to reflect these reductions in spot prices. If we consider this mix of spot and contract prices, on average polysilicon prices fell far less than modules in 2011,” added Wilkinson.

Gross margins are forecast to stabilize at nine percent on average in the second half of 2012, with further price declines offset by significant improvements in non-silicon processing costs and continued declines in blended silicon purchase prices, which are projected to reach $25/kg in Q3’12.

Detailed analysis of supply and demand dynamics in this market is available from IMS Research’s latest quarterly report on the industry.



No comments
The Engineers' Choice Awards highlight some of the best new control, instrumentation and automation products as chosen by...
The System Integrator Giants program lists the top 100 system integrators among companies listed in CFE Media's Global System Integrator Database.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
This eGuide illustrates solutions, applications and benefits of machine vision systems.
Learn how to increase device reliability in harsh environments and decrease unplanned system downtime.
This eGuide contains a series of articles and videos that considers theoretical and practical; immediate needs and a look into the future.
Robotic safety, collaboration, standards; DCS migration tips; IT/OT convergence; 2017 Control Engineering Salary and Career Survey
Integrated mobility; Artificial intelligence; Predictive motion control; Sensors and control system inputs; Asset Management; Cybersecurity
Big Data and IIoT value; Monitoring Big Data; Robotics safety standards and programming; Learning about PID
Featured articles highlight technologies that enable the Industrial Internet of Things, IIoT-related products and strategies to get data more easily to the user.
This article collection contains several articles on how automation and controls are helping human-machine interface (HMI) hardware and software advance.
This digital report will explore several aspects of how IIoT will transform manufacturing in the coming years.

Find and connect with the most suitable service provider for your unique application. Start searching the Global System Integrator Database Now!

Mobility as the means to offshore innovation; Preventing another Deepwater Horizon; ROVs as subsea robots; SCADA and the radio spectrum
Future of oil and gas projects; Reservoir models; The importance of SCADA to oil and gas
Big Data and bigger solutions; Tablet technologies; SCADA developments
Automation Engineer; Wood Group
System Integrator; Cross Integrated Systems Group
Jose S. Vasquez, Jr.
Fire & Life Safety Engineer; Technip USA Inc.
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me