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Thu Jan 19, 2012, 07:48 PM

Polysilicon Prices To Drop in 2012, Bringing Solar PV Prices to 70 Cents a Watt

http://thinkprogress.org/romm/2012/01/19/407196/polysilicon-prices-to-drop-in-2012-bringing-solar-pv-prices-to-70-cents-a-watt/?mobile=nc

The structural oversupply of solar modules on the global market has driven down prices for photovoltaic panels at an astonishing pace. And new analysis shows that decline will only continue into 2012.

In 2011, the average selling price for crystalline silicon PV modules was cut in half falling from $1.80 at the beginning of the year to $0.90 in December, according GTM Research.

With a glut of silicon now on the market, buyers are starting to renegotiate contracts downward. This could help drop the average price for crystalline silicon solar modules to as low as $0.70 a watt.

Brett Prior, a senior analyst with GTM Research explains how a ramp-up in silicon production activity in 2011 will impact the market over the coming year:

In 2011, in the polysilicon industry and the solar supply chain in general manufacturing outpaced end-use. After a half-decade of silicon demand outstripping supply, the aggressive expansion plans finally overshot. This supply/demand imbalance will push producers to lower contract prices closer to the level of manufacturing costs at $20 per kilogram, and will force higher-cost manufacturers to exit the industry. While the solar market will continue to grow at a 10 percent to 20 percent pace in the coming years, reductions in the amount of silicon used in each module means that end demand for polysilicon will grow at a slower pace. The end result is that the current roster of over 170 polysilicon manufacturers and startups will likely be winnowed down to a dozen survivors by the end of decade.

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