Unpacking the Dynamics of the US Solar Module Market

According to a recent analysis of the solar module market in Europe by PV Magazine, it has been noted that the US market remains the most expensive due to high tariffs, despite the Biden administration’s clean energy push.

This article is focused on Europe where there is a glut of modules in warehouses which is resulting in fire sales by suppliers and wholesalers. In our opinion, demand will soon outstrip supply again and push pricing up. The current pricing in Europe is not sustainable since the prices are well below actual costs and there is only so long that suppliers can sell at a loss and stay in business.

The US remains the most expensive market in the world due to the high tariff levels unique to the US and counter to the Biden administration’s push for clean energy.  In the US most of the surplus inventory is residential and some C&I installers are using residential modules vs commercial modules because the residential modules are so much less expensive (as much as $0.10 less than commercial modules). This glut of residential modules will ease as suppliers have stopped shipping these modules to the USA market.

Technological Shift and Global Outlook

There is also a general switch by suppliers from the n-Type PERC modules to the p-Type TOPCon technology which will increase the power classes into the high 500’s and mid 600’s and the higher power classes will command premium pricing and the PERC modules will be priced lower to exhaust those inventories.

In our opinion, worldwide demand will continue to exceed supply as more countries push clean energy transition and phase out fossil fuels and suppliers will be unable to keep up with the growing demand.  This will stabilize module pricing to levels allowing the major suppliers to be profitable and continue to expand their capacities.  By 2025 I expect US module pricing to be in the $0.37 to $0.42 range unless US suppliers pass on the subsidies they will be receiving under the IRA to their customers.  I do not expect them to do so since demand for US-made modules to get the extra 10% ITC will outstrip US-Made module supply.  But we shall see in the coming years how this plays out.

PV modules are in the end a semi-conductor product. Due to technological advances of all semi-conductors, the historic trend’s costs must come down significantly.