U.K.-based research firm New Energy Finance said Monday it expects the price of solar-grade silicon to drop as much as 43 percent next year.
The projection is based on confidential data from 10 polysilicon and solar-wafer buyers and sellers that, altogether, have signed contracts for approximately 1.7 gigawatts of wafers and 6 gigawatts of polysilicon, the company said.
In these contracts, the New Energy Finance Silicon and Wafer Price Index found that the median price for polysilicon slated for delivery in 2009 is 43 percent lower than the median price for deliveries in 2008.
The firm also found that the contract prices for future polysilicon deliveries fall each year to 2015, reaching prices of less than $67 per kilogram by 2013. That amounts to 67 percent below current median prices, but remains higher than the spot prices for silicon sold directly on the market – not through contracts – between 2002 and 2004, according to New Energy Finance.
Michael Rogol, managing director of Photon Consulting, has previously estimated that prices averaged $32 per kilogram by the end of 2004, regardless of whether the silicon was bought through contracts or on the spot market.
New Energy Finance doesn't expect the price for multicrystalline wafers to fall as quickly as silicon prices, however.
According to the report released Monday, wafers are expected to retain their value in 2009 as the supply of wafers eases more slowly than the silicon supply, and then to drop by 41 percent in the next five years, reaching prices below $6 per wafer, or $1.62 per watt, beginning in 2011.
"The first results [from the Silicon and Wafer Price Index] have confirmed that we will be seeing significant falls in prices right along the value chain as the polysilicon bottleneck eases, bringing solar closer to competitiveness with other power sources," New Energy Finance CEO Michael Liebreich said in a written statement.
He was careful to point out that the research only looked at contract prices and didn't conclude whether spot prices for silicon will be higher or lower than these contract prices.
"This is something we will be keeping a close eye on with this index," he added.
New Energy Finance said it expects to launch the index this week to provide data on near- and medium-term silicon and wafer prices.
The company isn't the first to suggest that silicon prices will be falling soon. Other analysts have also predicted that an oversupply may be on the way (see Oversupply of Silicon to Be Worse Than Expected, Incentives, Tech to Spark Debate at Intersolar: Pricing, New Research Predicts End to Silicon Shortage, Solar Industry Debates Silicon Supply, Solar Sector Heading for a Shakeout, Solar Margins About to Shrink? and Too Much PV in 2008?).