The demand for renewable energies has skyrocketed in the last year, encouraged by the increase in energy costs, and by events such as the war in Ukraine. Now, the main manufacturers of solar panels have indicated that in 2023 we will experience a sharp drop in the cost of photovoltaic solar panels thanks to the dramatic drop in the prices of materials such as silicon.
After the first part of the year where they had risen, in December of last year, the price of silicon, the key raw material for solar panels, began to fall. And it has done so with much more force than expected and seen so far in the market.
This has had the consequence that dense monocrystalline materials have gone from $45,091 per tonne they had in October, falling last week to $25,964 per tonne. A decrease of 42.4% in just a few days.
In January, the price of polysilicon, a mixture of lower-quality silicon from different sources, fell below $22,103 per ton, a drop of more than 50% from the previous month.
These data come from China, the world’s leading producer. There, the Ministry of Industry carried out a price reduction, which came at a time of increasing local production capacity. According to the China Photovoltaic Industry Association, in 2022, China’s polysilicon production was around 811,000 tons, a year-on-year increase of 65.5%. Two factors have helped bring down costs.
Will we see cheaper solar panels in 2023?
According to several experts, the price of silicon is likely to continue to decline in 2023, eventually settling in the range of $12,000-$18,000 per ton. Something that should be accompanied by a general drop in the final prices of the product.
On the one hand, silicon materials will not be a bottleneck that restricts demand, and the first impact of lower costs is usually an increase in production. Lower production costs will inevitably boost demand in the photovoltaic industry.
The lower prices of raw materials are already affecting the industry. Last week, an executive from a Chinese photovoltaic company told a Bloomberg reporter that ” companies in the upper and middle reaches of the industrial chain have started to significantly reduce ” their prices by as much as 30%.
Rumors in the Chinese media indicate that many solar panel producers have already started ramping up production and are expecting a rapid increase in demand from February due to lower costs.
This means that China’s PV industry could break new records in 2023, with it expected to exceed 100 GW of new capacity, surpassing the previous 2022 record of 80 GW.
The other big question is whether these reductions will also be felt in prices outside of China. And according to experts, this should be the case since Chinese manufacturers have between 50 and 80% of their market outside their borders.
Over the past month, the price of solar panels has fallen from $0.5 per watt to $0.23 per watt, down 54%. Industry experts expect the price in Europe to drop to between $0.22 and $0.17 per watt from the second quarter of 2023.
Something that should mean a sharp reduction in the costs of solar panels in the second half of the year as current stocks run out.