November saw a significant eight per cent drop in solar module prices, potentially signalling the end of a prolonged decline as the market hints at a rebound, according to PV magazine. But local reports in Pakistan say it would not affect much as businessmen have imported a large amount of solar panels.

This price drop, affecting all technologies, has squeezed profit margins even for recently acquired modules. Contributing factors include moderate demand, year-end stock clearance efforts, and emergency sales linked to insolvencies.

Some modules are available for less than $0.06/W, but experts caution buyers to avoid low-quality, no-name products due to operational risks and unreliable warranties from lesser-known Chinese manufacturers.

In a potential turning point, China’s export tax rebate on solar modules decreased from 13% to 9% on December 1, raising costs for exporters by 4%. This adjustment could lead to an increase in module prices by $0.03/W to $0.05/W, suggesting a shift in the market landscape.

On Wednesday, China’s industry ministry finalised investment guidelines for solar PV manufacturing projects, directing companies to ensure a minimum capital ratio of 30% for solar PV projects. Previously, that standard applied only to polysilicon manufacturing projects while the minimum for other PV projects was 20%.

In a strategic move, manufacturers are slashing production to create an artificial supply shortage in the solar module market. Capacity reductions in China, decreased exports, and winter factory shutdowns are all aimed at restoring profitability. If successful, this strategy could shift the market dynamics toward a seller’s market, allowing suppliers to set prices.

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The effectiveness of such an approach hinges on the existing stock levels in Europe. If supply remains adequate, the impact of production cuts may be limited, especially for mainstream modules. But premium products, such as high-efficiency bifacial glass-glass modules, could see more significant price hikes, further widening the gap between standard and high-end offerings. Meanwhile, budget modules may still be available at reduced prices.

Market participants are proceeding with caution, with some reversing previous cancellations of surplus goods and securing inventory. Projects with strong pipelines are preemptively buying to guard against potential shortages. If an end-of-year rush depletes current stocks, it could trigger the anticipated price increases, with even minor changes, like tax adjustments, potentially accelerating this shift.