Improving technology not the falling cost of materials will be the dominant factor in the ongoing fall in costs of Chinese module manufacturers, according to a report by GTM Research.

GTM claims that Chinese manufacturers will be able to produce modules at a cost of US$0.36 per Watt by 2017 and has provided more details on how they could get there.

They have already achieved a 54% decrease in manufacturing costs since 2010. GTM found that the majority of this came from the falling cost of materials caused by an oversupply with polysilicon responsible for 54% of the total reductions and other materials contributing a further 26%.

“Those kind of historical reductions don’t seem to be sustainable going forward. The question you should ask yourself is how are we going to get lower?” said Shyam Mehta, senior analyst with GTM and author of the report.

The report predicts Chinese manufacturers will only be able to cut prices by US$0.01 in the next year or so but this could be dwarfed by cuts of US$0.10 between 2014 and 2017.

“This is due to a very large drop in labour costs,” said Mehta. “We need a significant increase in the degree of automation employed by Chinese companies to mitigate labour inflation there.”

Future reductions in manufacturing costs will be led by investment in technology, a 60% contribution, and the falling cost of non-polysilicon related materials (22%). Scale will lead to a further 17% cut in prices but polysilicon will only contribute 1%.

Source: PV-Tech

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