Q2 2024 - Solar Price Update

It has been some time since our last solar price update. So what has the market been doing through 2024, and where are prices currently sitting?

This market insight examines the latest data on commercial and industrial (C&I) solar prices from the Beam Solar procurement platform, and analyses the impact of global economic factors on these prices, focusing on small and large commercial rooftop and ground-mount solar systems across Australia.

Solar Price Index

Small Commercial Rooftop Solar

The small commercial rooftop solar segment (30 kW to 100 kW) has experienced a price decrease over the past six months. The average cost at the beginning of 2024 was approximately $0.92/W, dropping to $0.88/W by the end of June. This reduction benefits small businesses by making solar investments more affordable.

Large Commercial Rooftop Solar

In the large commercial rooftop solar category (500 kW to 5 MW), the average system cost has remained stable, with a moving average of $1.18/W throughout the first half of 2024. The stability in pricing provides predictability for larger businesses planning their solar investments.

Ground Mount Solar

Ground mount solar systems (500 kW to 5 MW) have shown slight fluctuations but generally remained steady. The average cost increased slightly from $1.64/W at the beginning of the year to $1.68/W by the end of Q2. This stability suggests ground mount systems remain a reliable option for businesses with the necessary land.

Factors Influencing Solar System Pricing

Several factors have influenced solar system pricing over the past six months:

Freight Costs

The Freightos Baltic Index (FBX) indicates that container freight rates have remained relatively high, impacting the cost of importing solar panels and components into Australia [Freightos Data, July 2024].

Exchange Rates

Volatility in the Australian dollar against the US dollar has added complexity to pricing structures [Exchange Rates UK, July 2024].

Raw Material Costs

The IMF's Global Price of Agricultural Raw Material Index showed significant variability, initially increasing in Q1 2024 before declining again in Q2. These fluctuations affect manufacturers' costs and, consequently, solar system prices [IMF, July 2024].

Panel Pricing

Panel pricing has continued to drop due to high competition among top-tier solar panel manufacturers and instances of panel oversupply. Some major Chinese panel manufacturers have reported losses due to increased competition and declining prices, raising concerns about market consolidation and financial stability [PV Tech, 2024].

Trends and Market Dynamics

Despite certain global factors leaning towards increasing solar pricing in Australia, the data has shown either a downward trend or stable pricing throughout 2024. This is likely due to increasing competition in panel supply and solar installation driving cheaper prices.

The solar industry faces a paradox of decreasing panel prices putting financial strain on manufacturers. The continued drop in prices benefits consumers but poses risks to manufacturers, potentially driving some out of business. This trend emphasises the importance of selecting financially stable and reputable manufacturers to ensure the sustainability of solar investments.

Risks and Recommendations

While lower prices are advantageous for solar adopters, aggressive price competition has led to financial instability for some manufacturers, threatening the reliability of the supply chain. Businesses must procure equipment from reputable, financially strong manufacturers and partner with reliable solar installers to ensure quality installations and ongoing support.

At Beam Solar, we have put a lot of focus on assessing and ranking different manufacturers and installers based on a number of metrics, financial stability included. These rankings are designed to help businesses assess the risks of partnering with certain companies, and to help navigate the solar investment decision as effectively as possible. System prices should be assessed in conjunction with equipment and installer quality ratings to gain a complete view of the options. Too many times we see companies go for the cheapest offer which can end up costing them down the line.

Conclusion

As the C&I solar market in Australia navigates through 2024, it is crucial for businesses to stay informed about cost dynamics and the broader market environment. Understanding trends in roof & ground-mount solar systems is essential for making informed investment decisions. By partnering with strong, reputable players in the market, businesses can ensure the longevity and performance of their solar investments.

For those interested in starting their solar procurement journey, contact the Beam Solar team or click below to begin your Solar Assessment.

References

• Freightos Data, Freightos Baltic Index (FBX): Global Container Freight Index, Freightos Baltic Index, July 25, 2024.
• International Monetary Fund, Global price of Agr. Raw Material Index [PRAWMINDEXM], retrieved from FRED, Federal Reserve Bank of St. Louis; IMF Index, July 25, 2024.
• Exchange Rates UK - Australian Dollar (AUD) to US Dollar (USD) exchange rate history, Exchange Rates UK, July 25, 2024.
• PV Tech, Major Chinese solar manufacturers report losses in H1 2024 due to increased competition, PV Tech Article, July 25, 2024.
• LinkedIn post by Rami Fedda, Rami Fedda LinkedIn, July 25, 2024.