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Solar PV module costs pressure from Asia

Pricing pressure for solar photovoltaic (PV) modules will result in a growing share of production taking place in Asia as suppliers seek to drive down solar PV module manufacturing costs according to ongoing analysis from IMS Research.

With over 70% of solar PV module production capacity located in Asia in the final quarter of 2010, Asia’s share is forecast to continue growing steadily throughout 2011 as manufacturing expansion in this region accelerates.

Booming demand throughout 2010 has resulted in high shipment growth and limited pricing pressure for the solar PV module industry. However, as the over-heating German market begins to show signs of cooling, solar PV suppliers across the entire supply chain are becoming increasingly focused on reducing their manufacturing costs.

Moving to Asia

Many suppliers have recently announced ambitious cost reduction plans, all of which have a common theme – an increasing proportion of production taking place in Asia.

REC recently announced that its fully-automated Singapore-based solar wafer, cell and module production lines will be capable of producing modules for €0.97/W by the end of 2011.

At the same time, Evergreen Solar plans to produce modules for US$0.90/W by the end of 2012 at its Chinese facility – ambitious plans indeed given that its costs at its US plant were more than twice that in Q3’10, at US$1.88/W, IMS Research says.

“It is essential that PV costs continue to decline in order for PV to become a more sustainable industry that is less reliant on subsidies, and seemingly inevitable that manufacturing will shift to Asia, much as it has done in almost every other high-volume electronics market,” says PV Research Analyst, Sam Wilkinson.

“Large Chinese manufacturers are currently leading the industry in crystalline PV module cost reduction and other Western suppliers are joining them, by moving their own production to Asia.”

75% of production in Asia

Of course, in transitioning its production to Asia in a bid for low-cost manufacturing, the solar PV industry is simply following in the footsteps of every mature electronics market. Regardless, the move appears to be happening remarkably quickly and IMS Research predicts that before the end of 2011, over three-quarters of solar global PV module production will take place in Asia.

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Photovoltaics (PV)  •  Policy, investment and markets