Insights
Increased production capacity and dissolved nodes in the supply chains are pointed to as the primary drivers.
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Between 2009 and 2019, solar panel prices fell by ~ 90%, followed by a price rise during the pandemic years 2020-2022 due to bottlenecks in production and shipping. But in 2023, we saw another sharp drop in prices of around 43% (see graph below), driven primarily by a ketchup effect that occurred when the knots in the supply chains loosened up after the pandemic years, as well as a significant increase in production capacity from Chinese manufacturers. According to Bloomberg, the capacity of the largest producers (Tier 1) increased by 65% from Q1 to Q4 in 2023 from 509 GWp to 839 GWp annual capacity.
There are doubts as to whether producers are getting sufficient margins at current levels, but the big producers have the muscle to withstand current levels and exploit the situation to squeeze out smaller players in anticipation of the market stabilising.
Demand for solar cells globally continued to grow markedly also in 2023, where installed capacity ended at 373 GWp according to the IEA, up 64% from 2022 - a capacity that would supply roughly all of France's power consumption. This pace of growth could mean the market could stabilise and prices come back up before you know it.
Also read: How to charge for the solar power from a solar system
