The price of polysilicon, the key raw material in the manufacture of most solar photovoltaic panels, is set to drop by up to 43 per cent next year, according to the New Energy Finance Silicon and Wafer Price Index, which is launched this week.
The prices of solar-grade polysilicon and wafers are a crucial factor in the economics of photovoltaic energy. According to New Energy Finance analysis, shortages and production bottlenecks in these materials in recent years have kept the cost of photovoltaic modules some 37 per cent higher than would otherwise have been the case. Nevertheless, the number of new installations worldwide soared by 56 per cent last year and is set to grow a further 50 per cent in 2008.
The New Energy Finance Silicon and Wafer Price Index is based on confidential data provided by 10 volume buyers and sellers of polysilicon and wafers that have provided spot and forward pricing data for contracts signed in 2007 and this year.
The data for the inaugural release of the index covered wafer volume equivalent to approximately 1.7GW of photovoltaic modules, plus polysilicon data equivalent to approximately 6GW.
Key findings from the index include the fact that the median forward price for polysilicon deliveries in 2009 is 43 per cent lower than the median contract price for deliveries this year. It indicates the forward contract price for polysilicon falling each year from 2008 to 2015 and declining to less than USD67 per kilogramme by 2013, 67 per cent below current median prices, albeit still higher than the historical spot prices lows between 2002 and 2004.
The median forward price for multicrystalline wafers is set to hold at around the same level in 2009 as currently, indicating that the wafer supply situation is not expected to free up as quickly as polysilicon supply.
Over the next five years, median forward contract prices for wafers are set to drop by 41 per cent, further suggesting that margin will shift from polysilicon refining to wafer manufacturing. The median forward contract wafer price falls below USD6 per piece, or USD1.62 per watt, only from 2011, with implications for the speed of cost reductions in photovoltaic power.
'The launch of the New Energy Finance Silicon and Wafer Price Index finally provides industry participants and investors with analytical information to understand near and medium-term price drivers,' says Michael Liebreich, chairman and chief executive of New Energy Finance.
'These first results have confirmed that we will be seeing significant falls in prices right along the value chain as the polysilicon bottleneck eases, bringing solar closer to competitiveness with other power sources. Of course they don't answer the question as to whether, in the out years of this index, the spot market for polysilicon and wafers will end up above or below these forward contracts. That is something we will be keeping a close eye on with this index.'
New Energy Finance, an independent provider of research to investors in renewable energy, biofuels, low-carbon technologies and the carbon markets, has a research staff of 80 based in London, Washington, New York, Palo Alto, Beijing, New Delhi, Tel Aviv, Cape Town, São Paulo and Perth who track deal flow in venture capital, private equity, M&A, public markets, asset finance and carbon credits around the world.
New Carbon Finance, a division of New Energy Finance, is a provider of analysis, price forecasting, consultancy and risk management services relating to carbon with dedicated services for each of the major emerging carbon markets, European, global (Kyoto) and US, where it covers planned regional markets as well as potential federal initiatives.