1. Projections For Costs and
Prices In the PV Industry
Sam Wilkinson – PV Research Analyst – IMS Research
The Solar Future: Belgium
Wednesday 23rd March 2011

2. A Quick Introduction
Sam Wilkinson
PV Market Analyst, IMS Research
Global
Inquiring
outlook
What Does IMS Research Do? minds
local
Market research, business intelligence, knowledge
consultancy and conferences
Provide market data, forecasts, competitive
Enabling
Independent
benchmarking unbiased
sound
7 analysts focused on PV research
decisions
Offices in UK, USA, China, Korea & Japan
Researching PV market for 4 years+
Clients include leading PV suppliers
More Information?
www.PVMarketResearch.com
www.IMSResearch.com

3. The PV Industry
An Industry Which Currently Relies On Incentives
An Industry Shaped By Incentives (and Politics)
An Industry Whose Future Depends on Reducing
Costs

4. Global PV Demand – Current Outlook
Largest end-markets in 2010:
Germany Italy Czech Republic
30
25
Asia
20
Installations (GW)
Americas
15 EMEA
10
5
0
2006 2007 2008 2009 2010 2011 2012 2013

5. PV Module Supply – Current Outlook
Capacity Increasing very quickly in 2010
Will continue increasing in 2011 and 2012 - faster than demand
60
50
Capacity -
Annualised
40
Production
GW
30
Installations
20
10
0
2009 2010 2011 2012 2013 2014

6. PV Module Shipments – Current Outlook
40
35
30
25 Total
Shipments (GW)
20
15
10
5
0
2009 2010 2011 2012 2013 2014

7. PV Module Shipments – Current Outlook
40
35
30 Thin Film
25
Shipments (GW)
20 c-Si
15
10
5
0
2009 2010 2011 2012 2013 2014

8. PV Module Prices – Short Term
Many factors affecting short term trends in PV module prices
Prices are generally decreasing over time
2,50
2,00 c-Si
Price per Watt ($/W)
1,50
1,00
0,50
0,00
Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11

9. What Affects PV Module Costs?
PV Module costs are a complicated mixture of costs and prices,
including:
Polysilicon Costs and Prices
Ingot and Wafer Costs and Prices
Cell Costs and Prices
Module Costs and Prices
Transport Costs
Manufacturing Costs
Taxes

10. Current Cost Structure Of A PV Module
2,00 Module and Wafer margins are
1,80
currently inflated
1,60
Many integrated cell and module
Module
1,40 manufacturers. Therefore, making
the cell margin look even less
Price per Watt ($/W)
1,20
Cell
1,00
0,80
Wafer
0,60
0,40
0,20 Polysilicon
0,00
Costs Prices

11. Polysilicon Prices
A small proportion of polysilicon is sold on the spot market
Spot prices are volatile, particularly in times of high demand
120
100
Spot Price
80 Contract Price
Price per KG ($/kg)
60
40
20
0
Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11

12. What Will Suppliers Do To Reduce Costs?
Careful negotiation of supply contracts
Increasing vertical integration
By development, or acquisition, or partnerships?
Research and development Increasing cell efficiencies
Reducing material usage and wastage
Improving manufacturing efficiencies
Outsource production or move abroad
Higher volume and economies of scale

13. c-Si v CdTe Costs
Cadmium Telluride modules represent the majority of thin film market
Lower material costs, high volume, automated production with less ‘product
steps’
1,60
1,40
1,20 c-Si
CdTe
Cost per Watt ($/W)
1,00
0,80
0,60
0,40
0,20
0,00
Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11

14. PV Module Prices – Long Term Outlook
2,50
2,00 Module
Cell
Wafer
Price per Watt ($/W)
1,50 Polysilicon
Thin Film
1,00
0,50
0,00
2009 2010 2011 2012 2013 2014

15. Average Inverter Prices
0,45
0,40
0,35
Price per Watt ($/W)
0,30
0,25
0,20
0,15
0,10
0,05
0,00
2008 2009 2010 2011 2012 2013 2014
What affects average PV inverter prices?
Changes in product mix
Trends towards certain regions or system types

16. Inverter Production Costs
Inverter production is very different to module production.
How can inverter suppliers reduce costs?
A shift towards larger inverters?
Microinverters and power optimizers?
Move production to low-cost labour regions?

17. Other System Costs?
$ Modules
$ Inverters
$ Cables
$ Connectors
$ Frames
$ Trackers
$ Transformers
$ Permit or application fees
$ Grid connection costs
$ Installation costs
$ Service contracts
$ Warranties and uptime guarantees
$ System Cost

18. System Prices
Average system prices to decline ~40 % by 2014.
Decreases in module price are the largest contributor to system prices reducing
5,00
4,00 Other
Inverters
Modules
Price per Watt ($/W)
3,00
2,00
1,00
0,00
2009 2010 2011 2012 2013 2014

19. Conclusions
Incentive levels are declining and price reductions are essential
throughout the industry
System prices can fall sufficiently to maintain market growth
System prices can reduce by 40% by 2014
All areas of the industry have potential to reduce costs
Module prices have particularly good potential for cost reduction
Any questions??
Sam.WIlkinson@imsresearch.com www.pvmarketresearch.com