The recently released US Solar Market Insight report highlights a noteworthy trend in the global solar module market. According to the report, the average global solar module price during the third quarter of 2023 has seen a substantial decline of 30-40% compared to the first quarter of the same year. The primary driver behind this price reduction is attributed to supply-demand imbalances in China.
Despite the US market receiving a mere 0.1% of its solar panels from China, due to tariffs and the Uyghur Forced Labor Prevention Act (UFLPA), the repercussions of global trends have reverberated in the United States. US solar module prices experienced a 15% decrease in the third quarter of 2023 compared to the first quarter.
The report underscores the unique dynamics of the US solar module supply in contrast to the rest of the world. While global regions grapple with module oversupply, the US remains somewhat insulated due to its limited dependence on Chinese imports. Less than 0.1% of US module imports are from China, primarily due to tariffs, including anti-dumping and countervailing duties (AD/CVD), Section 201, and Section 301. Approximately 80% of modules for the US utility-scale market are sourced from Southeast Asia.
However, despite Southeast Asia being a low-cost region for module production, manufacturers still face challenges related to restrictions on polysilicon sourcing from China under the UFLPA. As a result, module supply to the US utility-scale sector remains relatively constrained compared to other global regions, keeping prices elevated.
Surprisingly, the utility-scale solar power market is grappling with challenges beyond solar module supplies. The availability of other electrical equipment, such as transformers and high-voltage circuit breakers, is causing delays of up to two years in some cases. This has led to an increase in balance of system (BOS) pricing for utility-scale solar, with electrical equipment availability expected to be a limiting factor for the sector’s growth in the coming years.
Breaking down pricing by sector, residential solar power system pricing increased by 3%, commercial solar power system pricing decreased by 2%, and utility-scale solar power system pricing saw an increase of 5% (single-axis trackers) to 6% (fixed-tilt systems).
The report details the component-wise breakdown, noting a 12% decline in module prices for the residential segment, a 6% decline for the commercial segment, and continued elevated pricing for the utility segment due to a one-year lag in module procurement.
As the industry navigates these pricing dynamics, uncertainties persist, and the economic and political landscape remains subject to potential shifts. The report anticipates that several factors, including segment differences, will influence solar pricing trends in the coming months and years.