The top 10 solar cell manufacturers in 3Q11, collectively representing 44% of global production, had a decidedly Asian flavor, according to data compiled by Lux Research. First Solar led the pack, but just barely -- right behind it were the Chinese solar trinity of Suntech, Yingli, and Trina (who led the pack in 2Q11, according to IMS Research). Other Asia-based suppliers on the list include Taiwan firms Motech and Neo Solar, and despite its name Canadian Solar has most of its operations and production in China and thus its costs and pricing are typical of regional peers.

 

Top 10 cell manufacturers in 3Q11, in MW and % of global cell production. (Source: Lux Research)

 

Both polysilicon production (notably REC) and module production are clearly shifting their gaze toward Asia -- and look for Asian manufacturers to keep rising on the list, eventually surpassing 50% even in the face of trade disputes and possible tariffs, notes Lux Research analyst Fatima Toor.

China is heading to the top not only in solar manufacturing but also as an end-market leader in its own right. Germany, the perennial end-market leader, is expected to bring on a third less new capacity in 2012 (to 5.3GW), leaving the door open for China to surpass it, nearly tripling new capacity installations to 5.5GW.

And here's something else to think about: What does it mean to be among the leaders in solar cell production, when the market is still in severe oversupply? Until end-demand catches up and closes the yawning gap (which could be as much as 20GW), suppliers especially on the upstream end will continue to feel the pressure of a strained market. Manufacturers are selling modules at record- and unsustainably-low ~$1/W to burn inventories, creating a "cut-throat" competitive market, notes Lux.

COMMENT:

The answer to your question "Are module prices sustainable below 1$/W?"is simple: YES.

There are many sources of information but the best source maybe the solar manufacturers themselves. For instance Canadian Solar, which is located in china, shows in their january investor presentation the following:

Wafer (including poly): 0.31 $/Watt
Cell: 0.20 $ Watt
Module: 0.25 $/Watt
Total: 0.76 $/Watt

Two other low cost manufacturers (Trina, Yingli) noted (Q3 conference calls) their silicon to module cost will be at or below 0.60 $/Watt at the end of 2012. With a price of poly at this moment of around 30$/watt and a conservative 6 g/W of poly. This leads to a total module cost of 0.78 $/Watt.

The following examples show clearly that module costs can be below 1$/Watt and still be profitable.

But that is not the most important question. There are several questions which are more vital:
- What is the cost of installation and BOS(Balance of System), or better why is there such a large difference in the installation cost in the US and Germany?
- How can this cost be reduced?

The cost difference between the US and Germany has been noted in some articles lately. One topic has not been dealt with: In the US there is no incentive to reduce cost to improve IRR. Residential customers do not receive FIT just as in germany so there is no financial incentive to install such a system. Since there is no incentive the installers do not have to have an economically reasonable installation and they can absorb all the profit. For large installations this incentive is there, because those investors care about their money, and that is why those prices are much lower.

The reduction of this cost in germany is quite easy: increased efficiency of modules plays a major role here. Increased efficiency modules mean lower labour cost, lower BOS cost, lower land cost, less space, etc.

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