Due to the strong increase in demand in 2022, manufacturers greatly increased production capacity and supply to Europe. With reduced energy costs (still clearly higher than before), inflation, increased interest rates and economic uncertainty, we clearly see demand at a different level than last year. This is noticeable in all segments and most strongly in the residential market. The unexpectedly moderate demand combined with the ramped-up supply of products has led to full warehouses at all players, from manufacturers to installers, in the market. The result has been a sharp and rapid fall in panel prices over the past six months and discounts on inverters, among others, to reduce stocks.
Panel prices are now at rock bottom levels and not breaking even for manufacturers despite the polysilicon price being at an all-time low. This is not a permanent situation and prices are expected to start an upward trend in early 2024 and around Chinese New Year. How fast and how strong it will be cannot be predicted. But that manufacturers will soon want to return to healthy price levels is foreseeable. Rebalancing supply and demand in Europe is part of the price recovery and various measures have already been taken by most factories beforehand, such as reducing capacity by temporarily or completely shutting down lines or factories, reducing supplies to Europe, removing stocks from Europe or selling stocks at temporarily low prices towards the end of this year. A good time for developers and installers to position themselves in time for project and customer volumes in the first half of 2024.
Despite the current situation, the outlook for the solar industry is still very bright. The need and demand for development towards renewable energy is stronger than ever. Market estimates by Solar Power Europe, among others, show growth of 24% of installed capacity in Europe, year on year until 2026. In the least scenario, this is still very positive at 16%. And towards 2030 too, the estimates are sea positive.
The expected development of panel manufacturers towards N-Type technology, as a replacement for P-Type, continues through 2024 and some manufacturers are moving towards glass-glass panels. The increasing need for battery solutions/applications is being met by portfolio expansion at several manufacturers and will be complemented by updated charge pole applications. The availability of substructure material is on par to meet the market demand.
We see this Solarcoaster year as a market correction that we will come through well by taking the right actions together with suppliers and customers. PVO as a 100% subsidiary of DCC Ltd (listed in London) is in a very solid situation with a parent company that fully supports the strategy and is committed to the solar industry in Europe for the long term.
All in all, a challenging gap year with plenty of opportunities for the further energy transition in 2024!
