BNEF: PV New Deal May Cause China's Solar Module Prices to Fall by 34%

With the introduction of the so-called "industry brake" PV new policy, the Chinese government has significantly reduced policy support for the deployment of solar energy, and Bloomberg New Energy Finance (BNEF) expects the entire solar value chain to be affected
.
BNEF predicts that China's polysilicon solar module prices will fall by 34%
in 2018.

This is equivalent to the decline in module prices in 2016, which only reached 40%
in 2011.

Since China is by far the world's largest solar market, this situation is expected to spread
globally.
BNEF said, "The biggest reason is that oversupply is universal
.
”

In the fourth quarter of 2017, BNEF's benchmark monocrystalline silicon module price was $0.
37 per watt, and that price is expected to fall to $0.
24 per watt by the end of this year, including China's 16% value-added tax
.

Supply chain dilemmas

BNEF predicts a "market panic" in the near term, with developers stopping installations in the third quarter while waiting for the release
of new quotas and cheaper module prices.

For supply chains, the impact of a sudden stop on the Chinese market is obvious
.
BNEF expects this to lead to an "increase in inventory"
.
According to preliminary statistics for May, a large number of multicrystalline wafers are already backlogged
.
The recent slowdown in demand is expected to further worsen the market
.

BNEF believes that this will have the worst impact on polysilicon due to the inflexibility of material production equipment, and expects prices to fall to $11-12 per kilogram by the end of the year
.
However, slowing demand will also affect non-silicon materials
.

This, in turn, will reduce the price of module production, and BNEF expects module production costs under the "best practice" model to fall to $0.
24 per watt, leaving very thin profit margins
for module manufacturers.
However, some large Chinese PV manufacturers are already expected to reduce their costs below these figures in the first half of 2019
.

Section 201

The impact on the U.
S.
market is unclear
.
But in the case of global oversupply, if PV prices in South Korea and Southeast Asia fall, the impact of the 30% tariff in Section 201 will be even smaller, because the import tariff is calculated as a percentage of
the module price.

Due to the price-sensitive nature of development, this will spur more project development, particularly in utility-scale sectors
hampered by Section 201.
But continued low prices will also hit margins at new plants being planned, including Hanwha's 1.
6 GW new plant in Georgia and First Solar's 1.
2 GW expansion in Ohio
.

However, given that the products may be used in the company's 2.
75GW supply agreement with NextEra, JinkoSolar's Jacksonville plant may be less affected
.
Similarly, the Tesla/Panasonic Gigafactory in upstate New York is more isolated from global prices because the solar roofs and HIT modules it produces are high-end products whose prices are less sensitive
to market prices.