2012 is looking to be a game changer for the solar market. Many had expected prices to firm up in 2011 given the fact that many players closed, however we didn’t see that happening. The influx of foreign (Chinese) panels have kept prices low.

Prices for solar cells skidded 62 percent in 2011 as Chinese companies led by Suntech boosted production and won market share from European and Japanese rivals.

With recent announcements from GE and Panasonic, all targeting a cost well under $1 per watt for finished modules, the days of solar modules costing over $1 per watt are over.

Add into the mix, Foxconn Technology Group, (the world’s largest maker of electronic components and maker of iPhones™ for Apple®) who is used to working on razor-thin margins, will change the game for the industry. Foxconn’s gross margin of 5.6 was less than half Suntech’s in the third quarter, according to data compiled by Bloomberg. While most solar module makers are used to making margins north of 20%, the entry of mass market players like Foxconn will drive costs down, eliminate inefficient module makers and encourage installation by a further reduction in market pricing.

What we could expect is a firming of pricing around the $0.75 (thin film) to $0.90 (crystalline) marks and this until further reductions in costs are brought by firms such as Foxconn. We’ll have to wait and see how this all plays out, but it looks to be a significant game changer for the industry.

Source: Bloomberg