Solar Modules at $0.09/W: What Cheap Panels Really Do to Project IRR

Solar modules have never been cheaper. FOB prices for mainstream panels sit at roughly $0.085 to $0.095 per watt, and polysilicon — the raw material whose spike defined the 2021-2022 supply crunch — has fallen around 84% from its 2022 peak. For a commercial or industrial buyer, the obvious question is whether this collapse translates directly into cheaper projects and fatter returns. The honest answer is: partly, and less than the headline suggests.

Where the module crash came from

This is a classic oversupply story. A wave of manufacturing capacity — much of it built in anticipation of demand that arrived more slowly than planned — met a market that could not absorb it fast enough. The result is a price floor that sits well below many manufacturers' cost of production, which is excellent news for buyers and unsustainable for parts of the supply side. Polysilicon leading the fall simply reflects that the crunch which drove 2022 prices has fully unwound.

For a purchaser, the practical consequence is straightforward: the panel line item on a commercial quote is as low as it has been in the history of the technology, and there is little reason to expect a near-term reversal while the overcapacity persists.

The number that actually governs your project

Here is the part that gets lost in the excitement. On an installed commercial and industrial system, modules typically represent only 30-40% of total cost. The rest is everything that turns a pallet of panels into a generating asset: inverters, mounting and racking, cabling and combiner boxes, the electrical balance of system, grid connection works, structural engineering, labour, design, and permitting.

That single fact reframes the whole discussion. If panels fall by, say, 20% but they are only a third of the system, the effect on total installed cost is on the order of a few percentage points — not 20%. And the non-module costs behave very differently. Labour, copper, steel, and inverter electronics have not fallen the way polysilicon has; some have risen. A grid connection in a congested region can cost more, and take longer, than anything on the panel side.

What this means for IRR

So the module crash is real and it does help — but it moves the needle on returns modestly, not dramatically, and it moves it least where the other costs are highest. A project's internal rate of return is far more sensitive to factors that have nothing to do with the panel price:

  • Self-consumption ratio. Electricity you use on-site is valued at your retail tariff; electricity you export is valued at a wholesale price that, in many markets, has fallen sharply. A design that consumes 70-85% of its output on-site will out-earn a cheaper design that exports half, every time.
  • Balance-of-system and connection cost. On a difficult roof or a congested grid, these dominate. Cheap modules cannot rescue a project whose connection works or structural strengthening blow the budget.
  • Yield and reliability over 25 years. The cheapest panel is a false economy if it degrades faster or comes with a warranty you cannot bank on. Component selection is an engineering decision, not a shopping decision.

In other words, low module prices lower the floor of what a good project costs, but they do not design the project. The returns are won in the balance of system, the load-matching, and the execution.

How to use cheap modules well

The right response to a soft module market is not to chase the absolute lowest panel price — it is to spend the saving where it compounds. That means putting engineering effort into sizing the system to on-site load, specifying quality inverters and mounting that will still be performing in year 20, and getting the grid strategy right before a single module is ordered.

This is precisely how our industrial and commercial solar team approaches a quote: the module price is treated as a favourable input, not as the project's value proposition. The value is in a design that consumes what it generates, survives its warranty period, and connects without a multi-year wait.

Cheap panels are genuinely good for commercial solar economics. Just don't let the headline number stand in for the project. The system is more than the sum of its cheapest part — and the returns live in everything the headline leaves out.