Solar Module prices slash
Solar module prices are declining sharply in global markets as the US-China anti–dumping tussle has led to stagnating demand and a build-up in inventory. Module prices have gone down to as low as 55c/watt from around 60-62c/watt, while solar cell prices are down to 35c/watt from around 40c/watt. Taiwanese companies are also severely affected, as the Chinese buyers who account for 40% of their sales have stopped purchases. The reason is that the US government is also roping in Taiwanese into their 2 year earlier anti- dumping duties which proved to be ineffectual. Now both Taiwan and Chinese made solar cells will face duties in the USA, which means that the Taiwanese loophole found by the big Chinese module makers such as Yingli Green (YGE), Trina Solar (TSL) and others is closed for them.
The final ruling is expected in the next 10 days and it has led to uncertainty amongst the module buyers which has led the market to freeze. The high inventory has led to all prices falling throughout the supply chain except poly prices. At these prices, most producers are running large losses and show that the oversupply situation has still not been resolved in the global solar industry. There are still many weak players left in this industry who do not have the scale, costs or technology but continue to run. Global demand has rocketed leading to many of the weaker suppliers surviving, though many have high debt burdens. If the low price scenario extends, then another wave of bankruptcies can be expected. Suntech (STP) and LDK Solar (LDK) were the victims of the last wave along with Q-Cells.
Solar industry remains extremely dynamic, with fast changing business models. Most of the successful companies now have expanded into the EPC and solar development space, effectively hedging the downturn in the solar component manufacturing area. Lower component prices help these companies in the EPC area as lower costs means more profits for them. SunEdison (SUNE) has also come out with an IPO of its solar assets in the form of a yieldco. I expect SunPower (SPWR) and First Solar (FSLR) to follow soon, given the success that Terraform is getting from the capital markets.
Contrary to PV makers’ high utilization rates spurred by demand in the UK and Japan demand in the first quarter of 2014, pricing in the PV industry is likely to drop in the following quarter, according to EnergyTrend, a subsidiary of Taiwan-based market intelligence firm TrendForce. The research organization attributed ongoing countervailing duty (CVD) and anti-dumping duty (AD) issues between the US, China, and Taiwan as the main cause behind the decline, and noted PV shipments were mostly focused on the US market while shipments have eased in other markets.