The latest round of company financial reports suggests that solar module selling prices will continue to fall, although more slowly than previously.
The impact of proliferating proposed import duties is a major unknown, however.
Solar panel, or module, prices have fallen sharply in the past five years, in response to global oversupply coupled with falling subsidies and the economic crisis in the world's biggest market, Europe.
Falling prices for the raw material polysilicon, which reached record lows last November have sapped prices for the finished modules, say manufacturers.
These factors have narrowed module manufacturing margins and cut solar power generation costs for end users, in turn leading to a pullback in subsidies which has further limited module demand and prices, combining to pose the question: when will prices stabilise?
China's Yingli, one of the top module manufacturers by volume shipped, pointed to a stabilisation of prices in an upbeat assessment which was not specific on timing.
"We expect that the prices of PV products, including PV modules, may gradually stabilise or increase slightly due to the increased demand caused by the quick development of new and emerging markets and the rationalised supply of PV products on the market," the company said in its latest annual report published in March.
It seems likely that price falls will slow, but rises soon are unlikely given data which show a continuing fall in manufacturing costs and selling prices.
Average selling prices for silicon-based modules, as reported by top 10 manufacturers, have fallen from around $3.5-$4.5 per watt in 2008 to $0.7-$0.8 per watt last year.
Price falls can be attributed both to competitiveness pressures and structural falls, the latter following advances in technology and benefits from growing economies of scale.
"We price our standard PV modules based on the prevailing market prices at the time we enter into sales contracts ... and our silicon-based raw materials costs," said China's Trina Solar, in its latest annual report.
Solar panel prices have fallen quicker than manufacturing costs, showing the impact of competitiveness pressures.
Yingli's quarterly and annual reports show average annual manufacturing costs per watt fell 35 per cent in 2012 versus 2011, compared with a 46 per cent drop in average selling prices.
Future module prices will be set by a combination of factors pushing in different directions.
Arguing for a levelling off in module prices, gross margins have narrowed sharply in the past two years, and these are in some cases now negative.
And average selling prices across manufacturers have converged, suggesting companies are now operating at the limit of available technology.
Some manufacturers point to stabilisation in prices over the course of last year.
"Since the first quarter of 2012, the price of PV modules has remained at a relatively stable level primarily due to the shake-out of certain uncompetitive production capacity and increased demand worldwide," said Yingli.
Arguing for continuing price falls, manufacturing costs are still falling quarter on quarter, show data from Yingli, Canadian Solar and JinkoSolar.
And module prices fell last year on an annual basis.
Perhaps most importantly, overcapacity remains.
The big unknown is a raft of mooted trade protection.
Threatened duties could separate the global market into silos, where each jurisdiction would favour local manufacturers, leading to higher selling prices as a result of less competition and the effect of the duties on import prices.
However, prices could fall, if trade restrictions deepened local overcapacity by constricting demand.
It is too soon to predict the outcome, as Europe awaits confirmation of rates, litigation continues in the United States regarding duties confirmed last year, while China mulls duties on solar raw materials and India weighs in with its own threatened trade protection.
The reaction of Chinese manufacturers underlines the threat which features highly in the "risk factors" section of their annual reports.
"If as the result of such investigations the European Parliament imposes anti dumping and countervailing tariffs or other trade protection measures, our exports to the European market may be materially and adversely affected," said Yingli, 40 per cent of whose revenues are from Europe.
"The imposition of the AD (US Anti dumping Duty Order) and CVD (Countervailing Duty Order) and any increase in the rate of AD or CVD or their respective deposit ratios will significantly increase the price of our products, negatively affect our sales in the US and adversely affect our results of operations," said China's Hanwha SolarOne.
This article was originally published by Reuters. Republished with permission.