Photovoltaics

Solar components and module makers should keep an eye on the copper market as shaky prices and economic volatility in Europe could be a growing concern.

If you had to pick one material to make a fuss about in PV then the chances are it would be crystalline silicon. If you are a flat-plate project developer then the bargain-bucket price for silicon is helping you get closer to the elusive goal of grid parity.

And if you are trying to develop just about any other form of solar power then the low price of silicon is spoiling your party, making it harder for your technology to compete. Either way, there is little doubt silicon costs are the main preoccupation in PV right now.

But that does not mean they are the only ones warranting attention. Take copper, for example. Copper cables are an important component in many solar inverters. And they are getting more expensive.

Throughout the 1990s and up to the mid-2000s, copper had traded fairly consistently at between USD$1 and $3 per kilo. In the last 10 years, however, the price has risen significantly, peaking at around $10 a kilo last year and currently hovering around the $8 mark.

What will happen to the copper prices in the future is anyone’s guess, but there are those who think it will continue to go up.

Copper prices

An online presentation on cable theft from BT, the UK telecommunications giant, cites a 62% forecast rise in the price of copper between 2009 and 2014, for example. And BT has good reason to be mindful of copper prices.

As the price of copper has risen, so has the incidence of BT cable theft by criminals looking to make money on the scrap market.

Plus last year the company hit the headlines after it was revealed its copper cabling could be worth GBP£50 billion on the spot market, more than twice the value of the entire business.

There is no suggestion yet thieves are specifically targeting PV plants in order to rip the copper out of inverters, although clearly materials and components theft will always remain an issue for the industry, particularly on remote plants.

But could rising copper costs affect the price of inverters and spell further trouble for the PV industry?

Fierce competition

Although the cost of plants has fallen much in recent years due to plummeting silicon prices, it is still true PV faces fierce competition from other energy sources, renewable or otherwise, so anything increasing capital requirements is going to be a problem.

Consequently, one source notes: “While the solar PV industry is focused on the price of modules and a looming trade war with China, it turns out that silicon prices may not be the primary commodity that system developers need to worry about in the coming year.”

Before rushing to stockpile copper or inverters, however, it is worth putting a couple of things in perspective. The first is that the primary characteristic of price of copper right now is not so much its growth as its volatility.

After a spell above $8 per kilo for the first quarter of the year, the price has recently dropped and is currently on a downward track.

In a recent interview with The Washington Post, Thomas Keller, chief executive officer of Codelco, a Chilean state-owned copper mining company, explains: “What we have witnessed is a decline in price in response to the uncertainty affecting the European economy.

“Participants in the market are being cautious in terms of their decision-making process, and are waiting how things unfold [sic], in Europe especially.”

Future trends

That means it is difficult to draw firm conclusions on future trends. In addition, some studies suggest the direction may actually be towards a copper over-supply by 2014.

The BME Copper Quarterly Report from Intierra Resource Intelligence, for example, indicates that new mines opening 2013 could help to cut the price of copper to around $6 per kilo by 2016.  As a result, say analysts, copper is likely to remain a minor concern for the PV market.

“It’s a critical commodity for magnetics and transformers in PV inverters, but the move to transformer-less inverters in the residential and small commercial space helped mitigate the impact,” says MJ Shiao, senior analyst for solar markets at GTM Research.

“The actual cost contribution of copper is only a few cents per watt. In summary, copper is definitely a commodity to keep an eye on, but it won’t have a large impact on final PV pricing.”

Wolfgang Schlichting, research director at NPD Solarbuzz, adds: “Copper is a true commodity, so if prices go up they go up for everyone. That may or may not be reflected in the final prices of inverters or parts which use a lot of copper.

“My impression is that the inverter companies still have much better margins than a lot of other manufacturers and other people in the value chain, so they might be in a better position to offset some of those increases.”