In the last years, the solar industry observes the daily variability of price for PV modules. 2022 is not an exception: PV manufacturers follow up the commodities prices regularly to buy raw materials at the best price. Purchase departments globally try to find suppliers at regional scale as well as overseas in order to supply the manufacturing processes.
Even with the volatility prices, the demand for PV remains high, as reflected in recent auction participation and corporate purchasing.
In addition, the raw material cost such as glass, aluminum, glass, silicone, nickel significantly influences the whole PV module chain. Eco Green Energy prepared a report based on last events to understand the correlation between commodities and PV modules costs.
Cost Breakdown PV modules per Components
In order to understand Cost, we need to dive deep in understating what drives Cost itself. Breaking down PV modules per components according to Dehghanimadvar, Egan & Chang, 2022, 68% of the PV module price is allocated to input materials; while production costs are responsible for 11% and other costs for the remaining 21%.
Transportation, Labor and Electricity costs varies with location and, so we can expect to be 4%, 9%, and 1% respectively and requires to consider a significant factor in globalizing model proposed by Dehghanimadvar.
Source: Dehghanimadvar, Egan & Chang, 2022. Economic Assessment of local solar module assembly in a global market. Cell Reports Physical Science 3, 100747, February 16, 2022
According Figure 2, over the 68% Input Materials such as Cells, Glass, Aluminium frame, EVA among others, the material price who predominates required materials are Cells (~60% – 0.130 USD/Wp), Glass (~13% – 0.030 USD/Wp), Aluminium Frame (~11% – 0.025 USD/Wp), Backsheet (~7% – 0.016 USD/Wp), Junction Box (~5% – 0.013 USD/Wp) and EVA & Others (~9% – 0.023 USD/Wp).
Back to 2021: tendency of commodities prices
The most crucial problem that was observed last year is the supply-demand gap. Over the last year, the rising price trends in commodities increased the burden on solar developers.
For example, speaking on the increase in aluminum prices, Harsh Jain, Director of Citizen Solar, said that last year it grew around to ~$3.4/kg. For the single module production, the manufacturer uses 2-3 kg of the material and the increase in prices has been in the range of ~$2-~$2.2/panel, which translates to 70.45 (N$0.006 W.)
“The raw feedstock for crystalline silicon ingots and wafers increased by 175% in the first six months of 2021 alone. And while new capacity is set to come online, many see high prices continuing through at least the first half of 2022.”Source: (PV Magazine, 2022)
Interpretating the Figure 3, PV module prices per segment responds proportionally to the commodities tendencies within the same period. We can notice based on Figure 4, how the PV modules price has been changing over the March 2021 – March 2022 period:
What is the situation right now with commodities prices?
In general, a good quality PV module needs silicon, glass, aluminum, and nickel. During the last month, we have prepared analytics on how the price for nickel, aluminum, glass, and polysilicon has been changing every day. Based on it, can notice that prices for raw materials were stable, but some factors influenced daily changes of it.
Table 1 – Percentual Variability on Commodity Prices March 2022 (Self Elaboration based on www.sunsirs.com)
As its possible to see on Table 1, a significant price change was noticed for Nickel at the beginning of March. The price on Monday 7th has skyrocketed over the last 48 hours with a stunning 250% rise that led the London Metal Exchange (LME) to halt trading on the next day. Things went even wilder on Tuesday, rising as high as $100,000 — nearly quadruple the price last Friday. (Source: EconomicTimesIndia, 2022).
Among the main factors that could influence are the European sanctions implemented during the Russian invasion to Ukraine. According to Bloomberg, Russia exports 17% of the world’s top-grade nickel as its third-largest producer. (Bloomberg, 2022)
Aluminum was almost stable during the month. In late March, the material was trading around $3,600 per ton, not far from a record high of $3,966 touched earlier this month. Earlier this month, the Australian Prime Minister Scott Morrison announced a ban on alumina and aluminum ores exports to Russia. Australia supplies almost 20% of Russia’s alumina, the key ingredient for producing aluminum (TradingEconomics, 2022).
Prices for silicon and glass even decrease during March, which positively influenced solar module production.
Now the solar market observing the black swan event, what affects the prices of aluminum, precious metal, silicon, and glass. But notice, raw material prices are quickly affected by current military crisses, their influence on module prices will only last for the short term. In the long run, module prices are mostly contingent on the prices of upstream sectors.
Despite the volatility prices, Eco Green Energy provides stable prices for its products in a short lead time, ensuring the smooth production time and understanding deeply our supply chain. We would like to emphasize our Clients there are no issues that affect currently the supply of raw materials for the PV modules elaboration.
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