EU prices on spot market modules: A wrench on the way

Germany’s 2021 EEG places a 300 kWp obstacle for solar panels on the roof. Although projects of this size and above are not required to participate in the public procurement process, this means that they do not automatically waive remuneration for 50% of the energy they supply to the grid. This new option seems so uninteresting that many so far prefer the old scheme, where operators of roofing systems up to 750 kWp are entitled to full compensation for the power generated by their systems. For installations designed according to the old rules, there is a deadline of 31 March 2021, where roof systems of up to 750 kWp must be connected to qualify for the full feed-in tariff.

Industry players know all too well what such a deadline means: A scramble for all the panels and inverters available in mid-March is already running at full tilt. Unfortunately, this has been exacerbated by the fact that Chinese producers cut production volumes and especially delivery volumes to Europe at the end of last year. Raw material prices rose across the board during 2020, likely due to pandemic-related production shortages in the spring. This caused bottlenecks and price increases, making it difficult to get cheap modules.

Even more dramatic, however, is the bottleneck in the logistics sector. Freight prices from Asia to Europe have almost quintupled in recent months. This sharp increase, which accounts for the largest share of current module price increases, is likely due to the lack of return shipping to Asia. In European seaports, containers – both full and empty – are piling up, and this is pushing up supply in Shanghai and Shenzhen. The pandemic has meant that for some time now, fewer goods are being exported from the United States and Europe to Asia rather than the other way around. The lack of affordable transportation has probably resulted in many modules being sold and installed in Asia.

In China, after a weak first half of 2020, there was a race to capture up to 40 GW of new PV capacity. In 2021, this trend is expected to continue with up to 50 GW of new installations. Therefore, the supply capacity for Europe is likely to be limited for some time. The lunar new year is also just around the corner. Time will tell whether travel around the country will lead to another extensive shutdown in China, as was the case in 2020. After last year’s shutdown, it was impossible to imagine a regular flow of production and distribution of important goods for several months.

Overall, we should expect a further module price increase of $ 0.02 to $ 0.03 per. Watt-top in the commercial and large construction segment for future deliveries. In the already priced smaller construction segment, the increase may be less significant. The current sharp surplus in demand will settle somewhat after March 31, at least in Germany. Modules in the higher efficiency range are likely to be somewhat easier to get to in April and May.

Played away

For most in the PV sector, 2020 went relatively well. After the first few months in the tight grip of the pandemic, something returned to normalcy back to the solar market. Prices were on target, orders were on the way and for the first time it was possible to plan for the future. By December, which was slowed down by the lock, everyone had prepared for a quiet Christmas and did not want to hear anything about precautions and material security. Thus, most players unfortunately could not see the dark clouds gathering.

So in the first few weeks of January, a rude awakening came. Suddenly, nothing seemed to fit together anymore, long-term plans did not work, and supposed winners turned into losers. Manufacturers, for example, are dissatisfied with contract prices from 2020, which they can no longer maintain without suffering losses. In some cases, the agreed sales prices are already 10% below the current purchase costs. However, fierce opposition from contractual partners means that it is rarely possible to raise agreed prices. Suppliers can only hope to be allowed to deliver the quantity owed at a later date when production costs return to the ground.

Module buyers do not feel much better. At least plant installers up to 750 kW who have not made timely preparations are probably now in a world of pain. They have neither the access to the material they need under the conditions they had previously calculated, nor sufficient time to procure and install new installations. There are simply not enough modules left on the market that can be delivered before the deadline. Everything that arrives on time is sold to the highest bidder by steep markings. In fact, the products available come from those who made provisions in a timely manner but do not have to meet a deadline. Many of us know this type of congestion, not only from the stock market, but from the early years of the EEC, when the feed-in tariff breakdown started on December 31st and into the depths of winter during the holidays, the assembly and installation work had to continue . This time, however, the deadline falls in the spring, when temperatures have hopefully risen again and work on the rooftops will be a little more pleasant.

Overview of price points broken down by technology in January 2020, including changes compared to the previous month (as of 24 January 2021):
Module class € / Wp Trend
since
2020
Trend
since
January 2020
Description
Crystalline modules
Bifacial 0.33 + 3.0% -12.8% Modules with bifacial cells, clear backing sheets or glass, framed and unframed
High efficiency 0.31 + 3.2% 0.0% Crystalline panels at 330 Wp and above with PERC, HJT, n-type or back-contact cells or combinations thereof
Completely black 0.32 + 3.1% 0.0% Module types with black backsheets, black frames and rated power between 290 Wp and 390 Wp
Mainstream 0.22 + 4.5% -8.0% Modules that typically contain 60 cells, standard aluminum frames, white backsheets, and 275 Wp to 325 Wp.
Discount 0.16 0.0% -5.9% Factory seconds, insolvency goods, used or low output modules and prodgoods with limited or no warranty
Notes: Only tax-free prices for photovoltaic modules are displayed, with prices quoted that reflect the average prices on the European spot market (customs cleared)
Source: pvXchange.com

About the author

Martin Schachinger has been active in photovoltaics and renewable energy for more than 20 years. In 2004, he founded the internationally recognized online trading platform pvXchange.com, where wholesalers, installers and service companies can purchase standard components, photovoltaic modules and inverters that are no longer manufactured, but there is an urgent need to repair defective photovoltaic systems.

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