Solar PV costs should drop in 2023

In 2022, Solar PV costs reversed the long-term trend of lower costs.  Higher shipping costs played a part, but supply unable to keep up with strong demand growth was the main factor.  In Canada, wholesale prices of PV panels were up about 25% from 2021.  Inverter prices were up, and availability was impacted by the semiconductor shortage.  The outlook for 2023 looks much better.

Shipping costs started dropping early this year.  According to Freightos, costs as of 2022-12-23 are less than a fifth of what they were a year ago.  Port delays have all but disappeared, so products are arriving in a timely fashion.  In 2023, freight costs should be $5 to $6 of the landed cost of PV panels.

Inverter prices won't be dropping much in 2023, as the supply of power semiconductors is still tight.  Electric vehicles use some of the same semiconductors as inverters, so the demand for EVs will continue to support power semiconductor prices.  As new technologies such as gallium nitride are incorporated in PV inverters, size and costs will go down.

Throughout 2022, prices of polysilicon have held at around triple their pre-COVID levels.  Polysilicon is the primary ingredient in solar cells, so those prices have a large impact on the price of PV panels. Prices have stayed high despite expanding capacity from China's polysilicon manufacturers.  However just before Christmas, PVinsights reported dropping polysilicon, wafer, and PV cell prices.  On December 23, LONGi announced a price drop of almost 30% for PV wafers, from 7.42 Yuan to 5.40 Yuan.

Module price drops should follow the drop in polysilicon, wafer, and cell prices.  Polysilicon ingots are cut into wafers, which are then processed into PV cells.  The cells are then soldered or welded together and assembled into modules.  The cost of cells makes up more than half the cost of the module, so lower cell prices will lead to lower module prices as inventories of cells are replenished.

By summer 2023, I expect wholesale PV panel prices to drop to 40c per watt, about where they were two years ago.  Inverter prices will likely hold close to their current levels, which is around $200 for a dual micro-inverter, and about $1,200 for a 4 kW string inverter.  Although customers will not see much change in prices for installed PV systems, they should no longer experience long delays waiting for panels or inverters.