Which element costs the most in a solar panel?

What costs the most in a solar panel? This is a question of greatest interest to manufacturers. Indeed, the most expensive element will be the one on which the main efforts will have to be made to reduce costs, in a context of fierce competition at the global level. However, it turns out that the price structure has been reversed, thus reversing the need for innovation.

A photovoltaic panel contains many materials: silicon, cover glass, electrical conductors, panel frame, etc. The cost of each of these materials will have an influence on the cost of the finished panel, to which will of course be added the manufacturing costs. and distribution. However, heightened competition at the global level (but especially in China) has led to cost reductions on certain materials, while others, in high demand internationally, have seen their prices rise sharply.

The cost structure of photovoltaic panels is therefore constantly evolving. Hence the interest for manufacturers to follow them with the greatest attention. In December 2024, the China Photovoltaic Industry Association (CPIA) conference was held. During the latter, analyst Yao Yao from SinoLink Securities provided an update on these developments.

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A reversal of the price structure

Polycrystalline silicon, the basic material for manufacturing photovoltaic cells, was previously the material that had the greatest impact on manufacturing costs. This is no longer the case today, since, due to the strong growth in production capacity, supply has increased significantly. It therefore only represents 9.9% of the total cost, and is relegated to fourth position.

Next comes the silver, which is used to make electrical connections in the panel. Its price increased by 30% in 2024, driven by industrial needs and speculation in precious metals; it now represents 11.6% of the panel costs. In second position, glass, at 13.4%, whose production capacities remain limited due to Chinese policy.

So what is the most expensive material in a solar panel? The answer is surprising: it is now no longer the heart of the panel which is the most expensive, but its frame, made of aluminum, for which global demand is very high. It thus represents 14% of total costs. And this is leading the industry to consider innovations to make frames less expensive: standardized designs, aluminum alloys, composite materials, even rubber.