The early months of 2022 have been filled with challenges and disruptions in many markets, and solar has been no exception. However, through the gloomy clouds there are rays of light on the horizon from a manufacturing and technology point of view. Here we take a brief look at the challenges and opportunities discussed in depth in PVEL’s and Exawatt’s Q1 2022 Solar Technology and Cost (STAC) report.
The short term: challenges continue
Many of the challenges experienced by the PV industry in 2021 have continued into 2022. Although polysilicon manufacturers have been ramping up production at a significant volume of new manufacturing capacity in Q1 2022, the increase in production volumes has been slower than expected. Coupled with strong demand from China and Europe, this has kept polysilicon prices exceptionally high. Shipping prices also remain at very high levels, and further COVID outbreaks in China – together with the resulting restrictions – have led to some disruption in logistics and production within the solar supply chain.
Chinese polysilicon production has increased steadily, but the pace of increase has fallen short of expectations
Of course, the greatest disruption has been for module buyers in the U.S., where supply has been disrupted by the recent AD/CVD case. Any tariffs that the U.S. Department of Commerce decide to impose, which could be up to 250%, would be backdated to March 31, 2022, or even further, making many buyers and sellers reluctant to bring modules in and accept the risk of the unknown. With the traditional flow of modules from SE Asia disrupted, module buyers have been looking elsewhere. This feeds into the already increasing interest in localization of manufacturing in other parts of the world, with major capacity plans from several Indian manufacturers and more and an increasing number of voices pushing for an expansion of manufacturing in Europe.
In the Q2 2022 STAC report (due out in late June) PVEL and Exawatt plan to take a deep dive into the AD/CVD topic, looking at what we can learn from past tariff impositions and similar situations in other industries.
The long term: reasons to be cheerful?
Looking to the longer term, there is more room for optimism, with innovations from manufacturers helping to drive down costs. For example, we expect the transition toward M10 and G12 wafer formats to continue, with resulting declines in both manufacturing costs and balance of system costs as well as increases in shipping density (kW per container). And while modules are exposed to high (and volatile) prices for aluminum – with an increase of $1,000/ton in aluminum prices corresponding to over 1 ¢/W increase in manufacturing cost – there is growing interest in alternative frame materials. Indeed, major manufacturers such as JinkoSolar and First Solar have publicly announced that they are investigating alternatives, and Risen Energy has launched a module featuring a steel frame with a zinc-aluminum-magnesium coating. Based on analysis of datasheets, we believe that the steel frame used by Risen adds approx. 1-2 kg (3-5% of total module weight) to a 132-cell G12 module when compared to an aluminum frame.
On the technology front, new announcements of plans for tunnel oxide passivated contact (TOPCon) and heterojunction (HJT) manufacturing capacity have continued, along with a steady stream of new product announcements. Our modelling continues to suggest that – for the leading manufacturers – module manufacturing cost (including depreciation) for TOPCon will reach parity with mono PERC on a cost-per-watt basis in 2024, with HJT likely to remain slightly more expensive unless its cell efficiency begins to pull away from that of TOPCon. As shown in the full report, one of the key drivers in achieving cost parity is set to be the growing efficiency delta between these technologies and the incumbent PERC modules, and we’ll be watching closely to see how this evolves. Indeed, in November 2021 Jinko presented its own cost roadmap, suggesting that n-type TOPCon could even reach cost parity with mono PERC in 2023, and we believe that the earlier timeline for Jinko’s forecast is driven principally by a more aggressive forecast for TOPCon module efficiency. Once COGS parity is reached, we expect a major market shift to occur, echoing the transition from multi BSF to mono PERC.
What is the Solar Technology and Cost Forecast Report (STAC)?
STAC is a subscription-based service that aims to provide an informed forecast of PV module efficiency, form factor and price for a rolling quarterly window looking forward three years. Our methodology leverages bottom-up cost analysis, based on data gathered from over 100 publicly traded companies throughout the PV module supply chain, combined with a manufacturing facility operations model that contains over 250 input variables. PVEL and Exawatt also incorporate manufacturer-reported top-down forecasts and industry trends observed over the past 10+ years, as well as findings from PVEL’s testing for the PV Module Product Qualification Program.
Next Steps
PVEL and Exawatt’s STAC report helps project developers and investors assess the technology roadmap and supply/demand dynamics for the PV module market.
Ready to learn more? Contact PVEL to request a sample STAC report or sign up as a subscriber.
About the Authors
Sishir Garemella is Head of International Business Development at PV Evolution Labs (PVEL). He is responsible for the company’s expansion in strategic global markets. Sishir is based in Delhi NCR and has over 10 years of experience as a downstream solar player, both as a financier and as an operator.
Alex Barrows is Head of PV at Exawatt, and is focused on forecasting the efficiency and cost evolution of solar technologies. Alex is based in Sheffield, England, and has a PhD in perovskite solar cells.