Crystalline PV module profits fall to single digits

Average gross profits of crystalline photovoltaic (PV) industry module manufacturers fell to just nine U.S. cents per watt in the first quarter of 2012.

06/26/2012


Average gross profits of crystalline photovoltaic (PV) industry module manufacturers fell to just nine U.S. cents per watt in the first quarter of 2012, putting huge pressure on suppliers according to the latest quarterly report from IMS Research, recently acquired by IHS Inc. As a result of continued price pressure and highly competitive market conditions throughout the PV industry, gross profits are forecast to continue to fall further to just seven cents per watt by the end of 2012.

The latest report from IMS Research revealed that following a year of rapid price declines, when average crystalline PV module prices fell by nearly 50%, industry gross profits fell below $500 million in Q1’12, the lowest level since 2008 and more than 75% lower year-on-year. The cause of this rapid deterioration is simply due to costs not falling as quickly as prices. Whilst average crystalline PV module prices fell by $0.67/watt in 2011, average costs per watt reduced by just $0.42.

“Profit margins have been the victim as suppliers have been forced to engage in a fierce price war and have reduced prices faster than they have been able to reduce their costs,” commented senior market analyst Sam Wilkinson. “High inventory levels, weak demand and reduced government support for PV have all contributed to a rapid downward spiral for PV module prices.”  

The narrowing gap between prices and costs has resulted in the average gross profit per watt of crystalline modules falling from $0.39 to just $0.09 in one year. One key reason that suppliers have been unable to reduce their costs quickly enough is that average polysilicon prices have not declined as quickly as module prices.

“Although spot prices for polysilicon have quickly fallen over the last year, a large proportion of polysilicon is purchased under long-term agreements, and it has taken some time for suppliers to cancel or renegotiate supply contracts in order to reflect these reductions in spot prices. If we consider this mix of spot and contract prices, on average polysilicon prices fell far less than modules in 2011,” added Wilkinson.

Gross margins are forecast to stabilize at nine percent on average in the second half of 2012, with further price declines offset by significant improvements in non-silicon processing costs and continued declines in blended silicon purchase prices, which are projected to reach $25/kg in Q3’12.

Detailed analysis of supply and demand dynamics in this market is available from IMS Research’s latest quarterly report on the industry.



Top Plant
The Top Plant program honors outstanding manufacturing facilities in North America.
Product of the Year
The Product of the Year program recognizes products newly released in the manufacturing industries.
System Integrator of the Year
Each year, a panel of Control Engineering and Plant Engineering editors and industry expert judges select the System Integrator of the Year Award winners in three categories.
GAMS preview, 2018 Mid-Year Report, EAM and Safety
June 2018
2018 Lubrication Guide, Motor and maintenance management, Control system migration
May 2018
Electrical standards, robots and Lean manufacturing, and how an aluminum packaging plant is helping community growth.
April 2018
2017 Product of the Year winners, retrofitting a press, IMTS and Hannover Messe preview, natural refrigerants, testing steam traps
SCADA standardization, capital expenditures, data-driven drilling and execution
June 2018
Machine learning, produced water benefits, programming cavity pumps
April 2018
ROVs, rigs, and the real time; wellsite valve manifolds; AI on a chip; analytics use for pipelines
Spring 2018
Burners for heat-treating furnaces, CHP, dryers, gas humidification, and more
Choosing an automation controller, Lean manufacturing
February 2018
Setting internal automation standards

Annual Salary Survey

After two years of economic concerns, manufacturing leaders once again have homed in on the single biggest issue facing their operations:

It's the workers—or more specifically, the lack of workers.

The 2017 Plant Engineering Salary Survey looks at not just what plant managers make, but what they think. As they look across their plants today, plant managers say they don’t have the operational depth to take on the new technologies and new challenges of global manufacturing.

Read more: 2017 Salary Survey

The Maintenance and Reliability Coach's blog
Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
One Voice for Manufacturing
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Maintenance and Reliability Professionals Blog
The Society for Maintenance and Reliability Professionals an organization devoted...
Machine Safety
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
Research Analyst Blog
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Marshall on Maintenance
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
Lachance on CMMS
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
Material Handling
This digital report explains how everything from conveyors and robots to automatic picking systems and digital orders have evolved to keep pace with the speed of change in the supply chain.
Electrical Safety Update
This digital report explains how plant engineers need to take greater care when it comes to electrical safety incidents on the plant floor.
IIoT: Machines, Equipment, & Asset Management
Articles in this digital report highlight technologies that enable Industrial Internet of Things, IIoT-related products and strategies.
Randy Steele
Maintenance Manager; California Oils Corp.
Matthew J. Woo, PE, RCDD, LEED AP BD+C
Associate, Electrical Engineering; Wood Harbinger
Randy Oliver
Control Systems Engineer; Robert Bosch Corp.
Data Centers: Impacts of Climate and Cooling Technology
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
Safety First: Arc Flash 101
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
Critical Power: Hospital Electrical Systems
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me