High demand in Germany and Italy had ensured stability in June but prices have now begun to fall again in the second half of 2012. The report reveals that average prices of crystalline PV modules bought from distributors increased by 3% during June in response to high demand in Germany, currently the world’s largest PV market – this peaked in June as developers rushed to connect their systems by the end of the month when the ‘grace period’ set under the previous Feed-in Tariff rate expired.

The strong German demand gave rise to higher prices in the run up to the deadline, but the slowdown that followed, along with the bleak outlook for demand during the second half of the year in Europe, generated a fall in prices of 2.4% in July. Meantime, overall prices fell more than 5% for western suppliers while prices for Chinese Tier-1 modules fell almost 3%. According to Sam Wilkinson, senior analyst at IMS Research’s PV Group, the supply of PV modules still exceeds demand and therefore suppliers are still engaging in “fierce price competition”.

While module prices have declined continually in the last year, IMS Research says the outlook for August is more positive with industry buyers and sellers expecting prices to increase by 0.3%. However, module suppliers and integrators forecast a further small decrease while distributors predict a small increase. Module supplier margins are “dangerously low”, says Wilson, so their ability to lower prices further will be extremely limited until they can significantly improve their cost structures.

Written by Robin Whitlock