Solar Panel Prices Are Low Again. Here’s Who’s Winning and Losing

Whether for utility-scale or rooftop projects, photovoltaic panels are cheaper than ever.

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An employee produces photovoltaic panel components for export to the United States and Europe at a manufacturing plant in Suqian, China on Feb. 17. Credit: Costfoto/NurPhoto via Getty Images
An employee produces photovoltaic panel components for export to the United States and Europe at a manufacturing plant in Suqian, China on Feb. 17. Credit: Costfoto/NurPhoto via Getty Images

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For decades, one of the near-constants in the shift to renewable energy was that solar panel prices were decreasing.

This downward curve hit a bump in 2020. Global prices began to rise, largely due to supply disruptions resulting from the COVID-19 pandemic.

At the time, analysts said the price increases likely were a short-term phenomenon as the supply adjusted to meet demand. Now we can say conclusively that those analysts were correct. Prices have gone down, and down, and down.

I set out this week to understand the reasons for the price fluctuations and get an idea of who stands to benefit as prices fall.

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Inexpensive panels are good for developers and consumers because projects cost less. But businesses that make and sell panels are having a rough time, especially those that had a lot of inventory left over from when prices were higher.

Global panel prices are now at all-time lows due to a glut of supply and improvements in the efficiency of manufacturing.

However, there is a large gap between the prices in the U.S. and globally because of U.S. trade policy.

As of last week, the average price was 11 cents per watt for photovoltaic panels, which is a global price, largely based on the market of the leading producer, China, according to BloombergNEF. The average price for panels in the United States was 31 cents per watt.

“P.V. module prices are much higher in the U.S. because, since 2012, the U.S. has essentially barred cheap, best-in-class modules from China from entering the U.S. market with prohibitively high tariffs,” said Pol Lezcano, a solar analyst at BloombergNEF.

He expects global and U.S. prices to continue to decline, with the substantial caveat that this outlook will change if the Biden administration announces new tariffs.

At the height of the 2021 price increase, panels coming from China sold for 28 cents per watt and panels in the United States sold for 38 cents per watt. 

Another dynamic is technological change, as a recent chemical formulation for polysilicon panels has taken hold in the market. The newer “TOPCon” panels have a higher efficiency than the old “PERC” panels, without much of a difference in price. Higher efficiency in this case means a panel can produce more electricity per unit of surface area.

The shift to TOPCon has meant that some companies with large stocks of PERC panels are having the equivalent of a clearance sale. (For more on the two panel technologies, this Solar Power World article by Kelly Pickerel is helpful.)

Any discussion of solar prices in the United States quickly turns into a talk about trade policy, and how the Biden administration’s strategy for clean energy jobs is sometimes at odds with its climate strategy. 

The Inflation Reduction Act, the administration’s landmark clean energy law, has incentives that aim to boost domestic manufacturing of solar panels. Biden wants to increase manufacturing jobs and make the United States less dependent on imports from Asia. Since the law took effect, manufacturing capacity at operating and announced plants has grown to 125 gigawatts of solar panels per year, up from 7 gigawatts per year before the law, according to the White House.

The administration also wants to dramatically increase the country’s use of renewable energy as part of a plan to reduce emissions and avoid the worst effects of climate change. This goal is much more feasible if solar panels are inexpensive and tariffs are minimal.

Last month, the administration announced actions to strengthen solar tariffs, including allowing the expiration of a 24-month pause in tariffs for panels imported from Cambodia, Malaysia, Thailand and Vietnam. A previous investigation found that some companies had been circumventing tariffs on Chinese solar panels by shipping them to those four countries and then on to the United States.

U.S. officials also reversed a Trump administration order that said bifacial—or double-sided—solar panels were exempt from tariffs that mainly apply to manufacturers in China.

The administration is considering additional tariffs that would try to counteract the dumping of low-cost solar panels into the global market by companies in Cambodia, Malaysia, Thailand and Vietnam. This would be on top of the now-unpaused tariffs that are for other violations of trade rules.

The Solar Energy Industries Association, a trade group, said it is “deeply concerned” about the potential for new tariffs to add to instability at a time when solar companies are already adapting to a lot of change.

So far, the issues I’m describing apply mostly to utility-scale solar, in which large companies buy and sell millions of panels and are sensitive to even the smallest changes in panel prices.

To get an idea of how the price swings are affecting rooftop solar, I spoke with Spencer Fields of EnergySage, a company that runs a consumer-focused website and also has an online marketplace for rooftop solar and energy storage.

“We’re seeing prices come down pretty much across the board,” he said, referring to the hundreds of thousands of bid prices on his site’s marketplace.

One reason for the price decrease, other than falling prices for panels themselves, is that the supply of installers and equipment for rooftop solar has grown to the point that it is outpacing demand from customers who are ready to buy, he said. Competition among installers is helping to push prices lower.

High interest rates also are a big issue, for the people buying systems and for the companies that install them.

“The majority of people who invest in solar ultimately end up financing it through a loan,” Fields said. “Given the current interest rate environment and where mortgage rates are, people are less inclined to finance these big purchases than they were when it was much cheaper to borrow money.”

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The cost of a solar project varies a lot based on the size. Large utility-scale projects have costs per watt that are roughly one-fourth the costs of per watt of a typical residential rooftop project, according to Lawrence Berkeley National Laboratory.

Despite all of those differences, all types of solar photovoltaic projects have costs that are moving in the same direction: down.

For now, I’m going to say this is a good thing, or at least the positive ramifications of cheap solar outweigh the negative ones for struggling solar companies.

I’m watching to see how this market will swing into balance and whether we can ever get to an equilibrium of affordable solar provided by companies that are financially sustainable.


Other stories about the energy transition to take note of this week:

The World Is Not on Track to Hit the Target of Tripling Renewable Energy Generation by 2030: Countries have not taken the actions necessary to meet the goal of tripling renewable energy generation by 2030, according to an analysis of national policies by the International Energy Agency, as Fiona Harvey reports for The Guardian. “The tripling target is ambitious but achievable—though only if governments quickly turn promises into plans of action,” said Fatih Birol, the executive director of the IEA, in a statement. Governments agreed last December at COP28 to pursue the goal as part of an attempt to avoid the most harmful effects of climate change. 

U.S. Utilities Are Slow to Embrace Grid Enhancing Technologies: Operators of transmission lines and other grid hardware have many tools available to boost the capacity of existing infrastructure, but U.S. companies have been slow to try these technologies, as Peter Behr reports for E&E News. The catch-all term for these tools is “grid-enhancing technologies,” which can include sensors, software and cables. The Biden administration and the Federal Energy Regulatory Commission have taken steps to increase the use of the technologies, but they are running into reluctance from utility companies that have track records of taking a while to warm up to new ways of doing things.

As Solar Power Surges, U.S. Wind Is in Trouble: The Inflation Reduction Act contains incentives to encourage construction of solar, wind and other carbon-free electricity sources. So far, solar power has grown a lot while wind power is now growing less than before the law was passed, as Brad Plumer and Nadja Popovich report for The New York Times. The story looks at data showing wind’s tepid growth and explains some reasons why onshore and offshore wind are having problems, including financial challenges and a slow regulatory process for offshore wind.

The Chevrolet Equinox EV Is Exactly What the Market Needs: Positive reviews are coming in for the Chevrolet Equinox EV, a new model that has begun arriving at dealerships. Patrick George of InsideEVs declares the model to be a “home run” with its combination of 300-plus miles of range and pricing in the mid-$30,000 range. Carlos Lago of Car and Driver writes that the Equinox EV “appears to be the kind of electric vehicle most people want.” He found that the vehicle’s outstanding range is a strong selling point, while he was critical of its “lazy acceleration” and inadequate storage space. I see these early reviews as a good sign for General Motors, which needs a strong seller as competition in the EV market grows much more intense.

Toyota Opens a ‘Megasite’ for EV Batteries in a Struggling N.C. Community, Fueled by Biden’s IRA: Toyota’s massive investment in North Carolina to build a battery plant is contributing to an economic revitalization of the area, as Nicole Norman reports for ICN. The community has ramped up job training programs to help to prepare residents for the thousands of jobs anticipated at the plant.

Inside Clean Energy is ICN’s weekly bulletin of news and analysis about the energy transition. Send news tips and questions to [email protected].

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