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4 January 2023

Module prices fall 5%, polysilicon will soon reach half of 2021 price

Polysilicon and solar module prices have fallen from $43 per kilogram and $278 per kW in November, to $25 per kg and $263 per kW at time of writing on January 4th. In the past week wafer and cell prices are down by 25% and modules 5%, but that’s an average – some module sales have reportedly been all the way down at $217.

That $263 figure is exactly what we predicted for mid-January, but it’s not mid-January yet, and we didn’t predict the 5% appreciation of the yuan against the dollar in the past two months. By mid-January the price will have fallen likely another 5%, so the fall is significantly swifter than we or anybody expected. Since we also had polysilicon falling to $17.5 per kg by the end of 2023, and modules to $228 per kW (compared to $300 per kW in April), perhaps then the real end-of-2023 module price will be lower than $228, more like $200 per kW.

See here for a free executive summary of last month’s Solar installs erupt as Polysilicon price peaks US falters on anti-dumping, IRA adjustments 222 GW solar installed this year, but 330 GW was made report.

It could merely be that prices are falling as a step change from November 2022 to January 2023, more abrupt rather than deeper. Consider also that Q1 is traditionally a quiet period with lower prices. But manufacturing expansions are still being pushed at scale – see this week’s orders section for multiple Chinese companies announcing they are entering the solar industry for the first time with GW-scale factories. China’s solar industry is set to expand as much in 2023 as it did in 2022, when it manufactured 330 GW as detailed in our recent paper on global Q3 solar installs. January’s polysilicon supply is expected to be 100,000 tons produced in China with 8,000 tons imported from the West – more than double the overall figure compared to January of 2022.

If demand doesn’t grow quite as rapidly as supply, and price drops cut too far into profits, then the plans for new wafer, cell and module factories can be cancelled, as these facilities take between 6 months to a year to build. But for the polysilicon segment with its 18 month build times, it’s too late to stop and overcapacity is certain. As such, the cost of solar modules is now resuming its pre-2021 cost trend. For markets that don’t have trade barriers to Chinese modules, the limiting factor for solar development is going to be workforce and grid congestion, not module cost.

China’s government approved trading of futures for industrial silicon in December, and informally warned polysilicon makers against hiking prices even higher in Q4. Polysilicon manufacturers account for a large fraction of demand for industrial silicon, which accounts for around a third of polysilicon production cost – the current cost per kilogram in futures trading is $2.67. Industrial silicon has had its own post-Coronavirus shortage and price spikes, but the biggest spike came and went in 2021, when the price went up by a factor of six and then fell to only double the prior value.