Global solar installation costs will continue to be shaped primarily by component and material expenses over the next decade, according to a new analysis from Fitch Solutions’ BMI. Despite gains in technology and manufacturing efficiency, essential materials – like silicon, glass, aluminum, and advanced inverters – will continue to underpin system costs.
Polysilicon makers are cutting production to tackle oversupply, which has recently driven prices to record lows. According to the Silicon Industry Branch of the China Nonferrous Metals Industry Association, high inventory levels and falling prices of downstream products are the main reasons behind polysilicon price drops, which, according to BMI analysts, have decreased to as low as $4.75/kg.
Wafer prices, too, have been on a downward spiral and continued falling in June 2025. According to BMI, n-type G10L wafers slipped 3.23% week-on-week (WoW) to RMB 0.90 ($0.13)/piece. For G12R and G12, wafer prices declined to RMB 1.04 ($0.15)/piece and RMB 1.25 ($0.18)/piece, respectively.
The price of solar cells remained steady at RMB 0.24 to 0.25 ($0.034 to $0.035)/W and RMB 0.66 to 0.67 ($0.092 to $0.094)/W for modules. BMI analysts still see weak demand and suggest wafer prices may remain under pressure in the near term. Installation costs are likely to keep following material prices, although long-term costs may ease with improved efficiencies and broader supply chains.
Raw material volatility – especially polysilicon – in addition to regulations and supply shifts, will continue to shape solar costs in the future. As polysilicon prices fall, overall PV costs are expected to decline, since this is the key material for solar cells, where most of the innovation in terms of cost reduction takes place.
TaiyangNews tracks the price movement in the Chinese solar supply chain on a weekly basis, in collaboration with the Chinese market research firm Gessey PV Consulting. The latest for calendar week 27 of 2025 is available here (see TaiyangNews PV Price Index – 2025 - CW27).
The BMI analysis also notes the regional differences in prices as it sees EU material prices at par with those in China, thanks to bulk buying, efficient logistics, relaxed trade barriers, a strong Euro, and a robust intra-EU distribution network. For now, Chinese imports dominate the EU’s solar supply chain as the bloc makes efforts to diversify raw material sourcing and localize manufacturing. This keeps the prices low, for now.
In contrast, US prices will continue to stay elevated due to tariffs, trade restrictions, labor costs and reliance on costlier suppliers. Domestic manufacturing is growing but remains less competitive, keeping US module costs elevated through the next decade.
Over the next 5 years, BMI projects Asia to continue to have a cost advantage over European and North American markets, even as diversified manufacturing locations slow down the cost-convergence.
Apart from component costs, labor costs, especially in installations, will also represent an increasing share of overall solar project costs over the next decade. BMI analysts explain that installation is largely local and labor-intensive, despite the growing use of standardized methods and digital tools. Labor can account for 10% to 20% of costs for a typical utility-scale system. It can go up in residential or complex commercial retrofits.
In mature markets like China, Germany, and the US, rising demand for skilled installers is pushing up wages and, at times, causing project delays. China’s labor cost advantage is shrinking, with wages projected to grow 12.27% annually, far outpacing Europe.
“This will contribute to the closing of the gap in installation prices over the next decade, which should serve to slow the penetration of Chinese components into the European market. The situation is even more pronounced in emerging markets, where labor pools are less experienced and the need for training and certification raises both cost and complexity,” reads the BMI analysis.
As module prices level off, labor will make up a larger share of total project costs. Efficiency gains from automation may help, but won’t replace the need for skilled workers.
