Could Global Distributed Solar PV Prices Drop Thanks to Suniva’s Petition?

On May 24, 2017, the US International Trade Commission (ITC) announced that it will consider a petition by Suniva, a bankrupt solar manufacturer in Atlanta, Georgia, to place tariffs on the most common kind of PV solar cells imported from around the globe. Suniva put forward a petition to set a minimum import price (MIP) to $0.78/W and requested a 4-year tariff schedule on crystalline silicon imports. According to the petition, the floor price would fall to $0.72/W in year 2, $0.69/W in year 3, and $0.68/W in year 4.

While the outcome of the ITC investigation will not be known for some time, the uncertainty that the investigation brings to project developers and investors is important. Both short-term and long-term effects can be expected:

• Short term: Module OEMs will increase imports to meet their firm contracts for the year. Projects in the late stages of development will try to secure modules before any decision on the tariff is made, potentially bringing projects forward. Uncertainty could boost installations for the rest of the year. Currently, there is a glut of module capacity, so any increase in demand could easily be met.
• Long term: For those developers unable to make the arrangements necessary to lessen the risks to their projects, they may postpone investment decisions until the risks are better understood (i.e., after the ITC decision).

So What If It Happens?

For now, it seems that developers see the risk of the new tariff as manageable. On the same day that the ITC began its investigation, a new contract signed by Arizona utility Tucson Electric Power (TEP) and US developer NextEra Energy set a record low price for large-scale solar power in the country. The TEP and NextEra contract allows the United States to join a select club of countries with solar at or below $0.03/kWh (alongside Chile, Mexico, and the United Arab Emirates). The project is expected to be commissioned by the end of 2019, when the tariff will have its full effect.

Guidehouse Insights anticipates 2019 module prices will be $0.39/W. With module prices potentially leaping by at least 50%, on the surface the TEP-NextEra contract seems like a potential disaster. But while the drop in module costs over the last few years has been impressive, reductions in other costs have been at least as impressive, limiting the effect that the MIP will have on the final cost of the project.

According to the Guidehouse Insights model, the cost of developing a utility-scale project in the United States with a 2019 commissioning date would increase from $0.93/W to $1.24/W (over 33%) due to the new MIP. In the case of the Arizona project, the cost per kilowatt-hour generated would increase from just below $0.03/kWh to just below $0.04/kWh.

More Bang (kWh) for Your Buck

Interestingly, the MIP requested by Suniva uses peak power (Wp) as its basis. This would drive a rapid shift toward quality, namely high efficiency modules. For example, developers could use SunPower’s X-series panels (currently with an efficiency of around 23%) instead of a conventional multi-Si module (with an efficiency of around 16%), thereby reducing the footprint of the plant by up to 30% for the same output. This would allow developers to offset higher module costs with lower balance of system costs and operations and maintenance costs. Using bifacial modules—which are hitting the market right now and could work well in the Arizona desert—could help reduce the footprint by another 15%-30%.

It is difficult to say whether NextEra could really bring the project cost back down to $0.03/kWh if the tariff comes into effect. However, it is important to remember that module costs do not make or break a project nowadays and that new technology is available that can reduce the module’s effect on the final cost of a project.