Why are the Prices of Solar Panels Decreasing? Major Reasons Uncovered
Recently after solar price reduction, it has become public suspense and interest to know that “Why are the prices of solar panels decreasing?”. In the past few months, the solar industry has badly crashed and today, the solar panel prices have reached the lowest price in the history of Pakistan.
If we consider international solar industry dynamics, these days, the prices of solar panels in the Chinese and global markets have fallen to astonishingly low figures.
One widespread and truly spoken reason behind solar panel price reduction is the mass production of solar panels by Chinese solar companies and others during the post-COVID period. The whole world was investing in renewable energy resources, so the solar manufacturers in China took it as an opportunity and started solar panel production on a massive scale.
If we speak specifically about the Pakistani market, solar prices have gradually seen an extraordinary decrease of solar panel prices in the past one and a half years.
The prices of top brands like LONGi, Jinko, JA, Trina, Canadian, and all other reputable tier 1 brands have been reduced to one-fourth of the original pricing around 16 months back, paving the path to a notable solar adoption and renewable energy shift nationwide.
Let’s explore the primary factors and international dynamics related to decreasing prices of solar products on a broader spectrum.
A Short Summary of Decreasing Solar Panel Prices in Pakistan
Solar panel prices in Pakistan have recently dropped significantly, which is a surprising development. The cost of solar panels has fallen by more or less 60%, resulting in nationwide attention to solar system installations and significant consumer savings.
For example, the price of a 550-watt solar panel has dropped dramatically from 70 thousand to 20 thousand rupees, representing a 50 thousand rupee savings.
Similarly, the 450-watt solar panel is now available for less or around 20 thousand rupees, while the 330-watt alternative is priced below 15 thousand rupees. So, the solar panels of a wide range of wattage are in high demand.
If we talk about what the solar traders think about the recent solar panel price fall, they credit two major factors: opening up of imports and tax reduction.
Import freedom has increased market competitiveness, while reductions in taxes have helped to lower overall costs on the import of solar panels.
It’s worth noting that this isn’t an isolated occurrence, as solar panel prices have currently dropped globally.
The Chinese companies have no production comparison with any other country. The Chinese government not only makes business-friendly policies but also helps enterprises to come to the table and make agreements for the future.
So, they have very cheap solar production units when compared to the whole world. The warehouses in China are filled with solar panels to export to their global clientele.
A similar case is with warehouses in Europe and America. They are overflowing with surplus solar panels sparking a global price drop, with costs continuing to fall steadily.
This development indicates a favorable impact on consumer access to solar energy alternatives at very cheap prices.
Understanding the Solar Panel Price Factors
Solar panels (photovoltaic (PV) modules) are devices that convert sunlight into electric current. The panels are the key component of a solar system that generates electrical power.
The cost of solar panels is determined by several factors, including technology improvements, production efficiencies, economies of scale, and government laws.
Solar energy systems have traditionally been expensive, limiting their widespread adoption. As a result, in recent years, there has been a spectacular downward trend in solar panel pricing, influenced by many main reasons.
Technical Advancements in Solar Panel Manufacturing
Advancements in solar technology have played a crucial role in decreasing the cost of solar panels. Polished-up efficiency, durability, and performance attributes have made solar energy economically workable.
Changes such as PERC (Passivated Emitter Real Cell) technology and bifacial solar panels have enhanced energy production while decreasing production costs.
Economies of Scaled Solar Panel Production
As the demand for solar panels has globally increased, solar panel manufacturers have reaped benefits from the financial state of scale.
Large-scale panel production allows to stretch down the fixed costs over a large number of units, resulting decrease in per-unit manufacturing costs.
This trend plays a pivotal role in decreasing prices, especially in industrialized countries like China with aspiring renewable targets that are currently driving considerable investments in solar panel-producing capacity.
Government Incentives and Policies on Solar Energy
Government incentives and policies have played an important role in boosting the adoption of solar energy and lowering prices.
In many countries, including Pakistan, the government offers aid allowances, tax credits, and feed-in tariffs to encourage investment in solar energy.
Furthermore, authorizing supervisory frameworks, such as net metering laws, which allow users to sell excess electricity back to the grid, has strengthened the economic argument for solar energy.
Uncovered Decreasing Solar Panel Prices Across Pakistan
The primary driver behind the unprecedented decline in solar panel prices is the imbalance between the supply and demand of solar panels.
Over the past year, there has been a substantial increase in the production capacity of both solar panel manufacturers and their raw material suppliers in China, coupled with the addition of new players (companies) in the solar industry.
Escalating oil and gas prices due to the Russia-Ukraine war have resulted in increased imports of solar panels. However, factors such as labor shortages and regulatory constraints have hindered installation efforts.
Consequently, warehouses in China are now full at their capacity with solar panels, compounded by ongoing production activities. This oversupply scenario has driven solar panel prices to unprecedented price lows in Pakistan.
As a result, many importers worldwide are exercising strict caution and ceased importing panels, which is a sign of further solar plate price reductions shortly.
Additionally, there has been a notable decline in the sales of solar panels by European companies across the globe due to the Israel-Palestine conflict.
Most of the European governments are supporting the brutal attacks of Israel on helpless citizens of Palestine [this is a minor but recent factor].
Despite this issue, you may have heard that European nations are looking for renewable solutions to protect the planet and environment for future generations.
Then why did their renewable solar panel production and sales fall?
The fact is that the majority of Europe’s solar panel imports originate from China, with approximately 60% of China’s total exports directed to Europe.
There are ample chances for the European governments to ban or impose heavy taxes on Chinese solar panels. They want the people to buy panels from their local solar brands which are much more costly in comparison to the Chinese solar panel.
As the Chinese solar companies are leading the whole world in this industry and have no comparison of production potential and revenue, their government supports them at every level of scaling their business worldwide.
They are now focusing on the Pakistani solar market because this land has a huge potential for solar energy harvesting but the current inflation has made it difficult for the public to invest in solar energy.
On the other hand, Chinese companies have overflowing stock at their warehouses with cheap production costs. So, all these triggered a recent solar panel price fall in Pakistan.
Impact of Panel Price Depreciation on Solar System Prices
Today, the news reported that the prices of solar panels in big cities like Karachi, Lahore, and Rawalpindi have again gone down to a new low figure.
This price drop usually has been seen in the winter season but this time it is happening just ahead of a very hot summer season.
Recent news reports indicate a significant shift in solar system market price dynamics, with prices dropping by as much as Rs100,000 to a notable Rs200,000 for domestic solar systems ranging from 7 to 15 kilowatts.
For instance, the cost of a 7-kilowatt solar system has been reduced by Rs100,000 to Rs825,000 with quality solar products, while a 10-kilowatt system now stands at Rs1.125 million following a substantial decrease.
Moreover, the price of a 12-kilowatt system has been slashed to Rs1.4 million, and a 15-kilowatt system is now available at Rs1.6 million, both experiencing a noteworthy reduction of around Rs200,000 when compared to their previous upfront costs.
The prices don’t depend on international solar industry dynamics only. The local importers can also play a vital role in price surges and price hikes at times.
For example, this remarkable decline in solar panel prices stands in strong contrast to the previous month’s scenario, where prices surged by anywhere from Rs75,000 to a staggering Rs300,000 for regular domestic solar systems due to escalating demand.
In the preceding month, consumers grappled with higher costs, with a 7-kilowatt system exceeding Rs920,000, a 10-kilowatt system priced at Rs1.25 million, a 12-kilowatt system reaching Rs1.6 million, and a 15-kilowatt system standing at Rs1.8 million.
In summary, the recent developments on the global spectrum are playing their part and solar price reduction.
This current price drop not only provides relief to consumers but also highlights the increasing affordability and accessibility of solar energy solutions in Lahore, Karachi, Islamabad, Rawalpindi, and other big cities of Pakistan.
As sustainable energy resources become more crucial in addressing climate change and energy needs, the decreased cost of solar panels is poised to encourage more people to adopt clean energy alternatives and help address the climate change problems in their capacity.
Future Price Predictions
Analysis of the current circumstances implies that solar panel prices will fall over the next year, with any prospective rises being minor.
This estimate points to a positive trend of increasingly inexpensive solar panel procurement. Given that China produces more than 80% of the world’s solar panels, market dynamics have a significant impact on worldwide pricing.
However, the availability of affordable solar panels in big cities like Karachi, Lahore, Islamabad, or Peshawar is considerably possible but in other parts of Pakistan, it is dependent on import conditions and the financial goals of solar importers and traders.
Conclusion
In conclusion, the dramatic decrease in solar panel prices in Pakistan is putting forward a new era of opportunity, accessibility, adoption, and affordability in the field of renewable energy across the whole country.
Driven by multiple factors including global market dynamics, technological advancements, and government policies, solar energy has become increasingly within a low budget and attainable for solar consumers in Pakistan.
FAQs on Why are the Prices of Solar Panels Decreasing?
Will solar panels become cheaper in Pakistan?
Pakistan’s government is trying to make solar panels more cheap and affordable for the public. The recent scenarios will boost a significant clean energy adoption in Pakistan.
As solar panel prices are improving day by day, Pakistan can replace oil and gas power plants with solar energy power plants, reducing pollution. The sun has enough potential to provide solar energy for Pakistan’s future generations.
Why are solar panel prices dropping?
There are so many factors that contribute to the solar panel price falls. Explore this article to learn the critical price factors and more about decreasing solar panel prices in Pakistan.
What is the price of solar panels in Pakistan in 2024?
There is no set of rules to define solar prices on a particular day. The price has ups and downs every day. Click here to know the updated prices of panels today.
