From the editor: Price collapse

Early this week, the second-largest PV module maker in the United States, SolarWorld, announced that that while it still expects to ship the same volume of modules, that it will not meet its forecast for revenue and profitability in 2016. The same day, SMA, the world’s largest inverter maker announced that it was also reducing its guidance for revenue and operating income.

For both of these companies, the culprit is clear. Despite being in different parts of the value chain, both SolarWorld and SMA are feeling the impact of sharp reductions in price.

For SolarWorld, this damage comes despite the company having a strong network of installers which it supplies under long-term, relatively stable arrangements. We can only guess what the impact is on those who are more exposed to the market.

Earlier this month pv magazine correspondent Frank Andorka spoke to veteran solar analyst Paula Mints about the decline in prices. Mints described the root cause as panic selling by Chinese PV makers who are stuck with huge inventories in the wake of a slow-down in their domestic market due to a reduction in feed-in tariff levels.

The last time we saw sustained price collapses below the cost of production, the result was decimation of European and American PV makers. This time fewer and larger Western PV and inverter makers remain, and we will see what the impacts are on the industry, and if we lose more European and American manufacturing in the process.

And as we discussed with GTM Research Associate Director of Solar Cory Honeyman at the recent SPI trade show, this drop in module prices is unlikely to even have much of a role in stimulating demand in the near-term, meaning no silver lining to this cloud.

Whatever the cause, the impacts are expected to be seen as manufacturers begin reporting their third quarter results, starting with First Solar next Wednesday. pv magazine and pv magazine USA will be covering the quarterly results of all major publicly traded companies, so be sure to check back to get a better sense of where the industry is at.

Also, be sure to check out pv magazine‘s November print edition, which will have a special section on module price collapses.