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

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

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.

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 Bloomberg NEF. 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.

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.

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 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, this is a good thing, or at least the positive ramifications of cheap solar outweigh the negative ones for struggling solar companies.