As shown in Figure 1, the international spot prices of PV modules have continued to decrease. The average spot price of PV modules worldwide in 2023 is 12 cents/W, a significant drop from 23 cents/W in 2022. In 2024, the price remained in the 10 cents/W range from the beginning of the year to April, and fell below 10 cents/W in May, and at the end of July, if dropped to 8.7 cents/W for PV modules using 182 mm wafers and 9.3 cents/W for those using 210 mm wafers. The price of N-type crystalline silicon (c-Si) PV modules (using 182 mm wafers) fell below 9 cents/W, and dropped to 8.9 cents/W at the end of July.

Figure 1 Trends in spot prices of PV modules

Source: PVinsights (announced from January 2, 2020 to July 17, 2024)

The decline in spot prices is due to excess production capacity throughout the PV supply chain. As shown in Figure 2, production capacity at the end of 2023 was 1 TW/year, but with the speed of production capacity expansion being faster than the growth speed of the PV market, inventory has expanded, and the market continues to be oversupplied.

Figure 2 Global PV installed capacity, production volume (MW) and production capacity (MW/year) of PV modules

Source: Data until 2022: IEA PVPS Trends Report 2023, data of 2023: RTS Corporation

Many PV module manufacturers announced that they expect to record net losses in their financial results of the first half of 2024. In China, there is a risk that the entire industry will be exhausted due to the very fierce competition within the industry, known as “involution”, and there are moves to encourage mergers and consolidations and to select companies. Under such circumstance, in China, the expansion of production capacity has slowed down, and there have been an increasing number of announcements of the cancellation and postponement of production plans. Meanwhile, in the USA and India, production capacity expansion is progressing due to incentives based on production volume. In Europe, under the Net Zero Industry Act (NZIA), it has been decided to procure 40% of PV installations from within the region, and the establishment of PV supply chain is also progressing in the Middle East and Australia. In this way, the adjustment and strengthening of production frameworks is progressing simultaneously around the world, and it is expected that it will take time to close the supply-demand gap. Unless the global supply-demand gap is resolved, the low-price trend of PV modules will continue for the time being, and it is expected that they will remain in the current zone at least until the end of 2025.

As the price of PV modules has fallen, national governments are strengthening their shift to PV power generation from the perspective of energy security, even though rising interest rates are increasing financing costs and labor costs are rising, and the introduction of PV is expanding. The upfront cost for utility-scale PV applications in 2023 in major markets, including the USA, has dropped to about $ 0.7 /W. Even a relatively large-scale distributed PV system (rooftop installation) costs $ 1 /W. As the upfront cost has fallen, the levelized cost of electricity (LCOE) for utility-scale PV applications has also fallen to 2.9 to 9.2 cents/kWh (according to Lazard, USA), making PV even more competitive against fossil fuels and nuclear power generation. In addition, the global evolution of PV power generation is not only about the economics mentioned above, but also about technological innovations that expand the scope of its use as energy, such as high efficiency, long life, standardization of module size, next generation technologies such as perovskite solar cells (PSCs), and 24/7 (24 hours a day, 7 days a week) compatible applications incorporating power storage technology such as storage batteries.

In Japan, the Ministry of Economy, Trade and Industry (METI) is assessing the current situation and verifying power generation costs in preparation for formulating the Seventh Strategic Energy Plan. As we look towards FY 2040, in expectation of PV power generation to overcome its current challenges through technological advancements and integration, and to play a major role as an energy source, it is hoped that the innovative introduction targets that will lead the way toward carbon neutrality, on par with the rest of the world.