Photovoltaic module prices rise! Will it affect the European photovoltaic market?

Since 2007, the development of the European photovoltaic market has experienced ups and downs, and a dynamic photovoltaic market is a necessary condition for achieving Europe's decarbonization goals.

Some people believe that the rising price of photovoltaic systems is a potential threat to the development of photovoltaic, and the main reason for the rising price of photovoltaic systems is the use of European-made components. Chinese competitors have dominated the market for several years with competitive products.

Nonetheless, some people worry that European-made photovoltaic modules will increase the cost of photovoltaic systems and the LCOE of photovoltaic power generation, slowing down the growth of the photovoltaic market.

The EU photovoltaic market has grown significantly over the past few years. Preliminary data shows that the EU's photovoltaic installed capacity will be close to 55GWdc in 2023.

This is the result of market growth in Germany and Italy and several smaller European countries, as well as new policies adopted by major countries in the wake of energy tensions caused by the Russia-Ukraine conflict. The photovoltaic market in Europe is already growing, with a clear acceleration after February 2022.

According to the current level of market development, the 2025 target (320GW) will be achieved in 2024, and the market level required to achieve the 2030 target is lower than in 2023: 50GW of photovoltaic power generation per year can achieve the 2030 EU target. This market level is lower than expected by the European Commission.

So far, the EU is on track to meet its PV deployment targets, which may be reached earlier than expected. But can these goals be achieved if part of the EU PV market is limited to European PV products that are more expensive than imported Chinese modules?

Overcapacity reduces producers' profit margins and has historically led to industry restructuring.

Ultimately, this will align market prices with reasonable profit margins in the medium to long term. Therefore, it is likely that the price of PV modules will rise again at some point to achieve more sustainable development.

Compared with the overcapacity in China's photovoltaic industry, the weakness of the global photovoltaic market will lead to long-term overcapacity. Some reports indicate that by 2023, China's production capacity will be twice the size of the market, and that the expected growth of the global PV market will take several years to absorb this excess capacity.

It is worth noting that the European market did not wait for lower prices, and prices began to fall significantly in 2023, especially after the summer (see above), the preparation time for the development of large-scale ground-mounted PV power plants is generally more than a year.

Therefore, the installed capacity in 2023 is determined based on the business plan for 2021 or 2022, when module prices are significantly higher. In Europe, the preparation time for household projects is generally shorter, averaging 3-6 months.

The market acceleration in the second half of 2023 is due to the ultra-low prices in the market, which has existed for several years. As we have mentioned many times, even the COVID-19 epidemic has not been able to stop the development of the European and global photovoltaic markets.

The 2020 renewable energy target deadline has sounded alarm bells in some countries, and the acceleration in 2019 is mainly due to political changes in several key countries since 2017. For example, France or Spain have introduced a series of ambitious energy policies to accelerate the development of photovoltaic power. The new German alliance paves the way for the current market to accelerate, with prices surging in 2021 and 2022.

Therefore, the sharp increase in PV module prices in 2021 and 2022 (mainly stemming from the disruption of the Chinese value chain and increased transportation costs) has not stopped or slowed down the development of the European PV market, which continues to grow significantly.