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Spurred by the strong year end (2011) demand, the solar energy market posted positive growth in the upstream segment over the past week. Much of the inventory glut has been cleared due to the spike in installations and significant demand from regions such as Germany, USA and Italy. The clearence of the inventory, followed by new orders recieved by upstream manufacturers to replenish stock have led to a second weekly rise in solar component prices.

The average selling price (ASP) of polysilicon increased by about 3.03% over last week’s numbers and hovers around $27 per kg. It is expected that the price would rise and hold steady between $29 and $30 per kg over the coming months. If the Chinese government mandates on solar capacity additions come to fruition it is very likely that the ASP of polysilicon would go over $30 per kg. Price of multi silicon wafers rose by 0.61% from last week, while that of the more expensive monocrystalline silcon rose by a more modest 0.13%. Downstream, the price of both monocrystalline and multicrystalline cells rose by 0.40% while the price of modules held steady showing no change over last week.

As mentioned previously, various Chinese manufacturers were either cutting down production or in the worst case, shutting shop. This has further helped combat the glut in the market which in turn has helped raise the price of the components over the past weeks as the spike in year-end demand has made supply tight. Solar stocks which rose significantly last week, have fallen by similar amounts this week primarily owing to announcements from the largest solar market – Germany that there would be significant cuts to FiT this year.

The forecast remains the same as last week, it is likely that the price will continue to rise (not by significant percentages) while demand is still high and plateau out over the coming months – falling or going below current cost levels. As to whether this small rise in cost of solar over the coming months would have a negative impact on the capacity additions remains to be seen.

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