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Tim Buckley, Director of Climate Energy Finance, talks to pv magazine about the current steep trajectory in solar module prices. He estimates that PV panel prices will end up falling by 40% this year and predicts the closure of old technology and subscale solar manufacturing facilities, both in China and the rest of the world. Solar module prices could approach the $0.10/W threshold by the end of 2024 or eventually 2025, according to Tim Buckley, director of Australia-based think tank Climate Energy Finance (CEF). “This would be a big advance on Dr. Martin Greens forecast of $0.10/W for 2030 made three years ago,” he told pv magazine , adding that he reached this conclusion after estimating that new annual energy additions photovoltaics could reach between 600 GW and 1 TW already by the end of this decade. “I am very optimistic about the pace of global growth of solar installations in the coming years. “Putin’s invasion of Ukraine has reminded us all of the need for energy supply chain and security, especially with regard to dependence on imported energy.” Buckley also noted that the likely new climate deal by Chinese President Xi Jinping and US President Joe Biden could see a formal call to triple renewable energy capacity worldwide by 2030. “At a time when capital investment costs are skyrocketing, being able to invest in deflationary solar energy is a huge global boon that will ease pressure on the cost of living and improve energy security,” he said. Overcapacity issues Buckley said pressure on prices will increase due to the staggering capacity increases announced by the PV industry globally, although he questioned a recent forecast by the International Energy Agency (IEA) in its recent World Energy Outlook 2023, which stated that the worlds cumulative installed solar capacity could reach 2 TW by 2025. “I find the IEAs assumption that the Chinese will start up their new factories only 35% of the time ridiculous,” he added. “When this new capacity comes online for a full year, I would expect the IEA figures to be understated by more than 50% in terms of global annual solar installations.” Buckley estimates that solar module prices will end up falling by 40% this year. “This will give many investors in the US, India, EU and China good reason to pause or rethink their financial assumptions on which they based their announcements of massive capacity expansions,” he says. “In the face of this, both the US and India have import tariffs on solar modules of 40% compared to Chinese products, so they are largely insulated from excessive price competition, and also share in the savings of costs of the 70% decrease in the price of polysilicon during the last year.” On the other hand, rapid deflation and excessive price pressures may soon lead to the closure of lower-scale, old-tech solar manufacturing facilities, both in China and around the world. “Older facilities simply cannot compete with the scale advantages and investments in new technologies of the worlds leading companies in this sector, almost all of them Chinese,” says Buckley. New cycle Describing this new industrial cycle for solar photovoltaic technology, Buckley said it is different from previous ones, as solar energy is now the cheapest electricity, which is disrupting traditional competitors in the sector. This means that finances will quickly flee from investing in any new thermal energy capacity in the electricity sector globally,” he stated. The analyst is convinced that finance will not only flee for environmental, social and governance (ESG) issues or for moralistic or climate reasons, but that it will flee anyway because it will not provide new financing to inevitably stranded assets, particularly with the rapid simultaneous increase in battery energy storage and electric vehicles. “This time is different because of the convergence of the energy, industrial and transportation markets,” Buckley said. Tim Buckley is the lead author of “ Solar pivot: A massive global solar boom is disrupting energy markets and speeding the transition ,” published by the CEF in June. In it, Buckley and his colleagues say they estimate that solar electricity costs will decline by 10% annually for the rest of this decade, halving by 2030. The report also provides detailed information on the operational and planned capacity of the global photovoltaic supply chain. |
