This Is How PV Bill of Materials Impacts Module Production in 2024: Part 2

In Part 1, we explored the first four key components of the PV Bill of Materials (BOM): electroplated diamond wires, silver paste, PV glass, and encapsulants. Now, in Part 2, we’ll delve into the remaining four components—frame, backsheet, junction box, and ribbon—detailing how their cost, demand, and supply are shaping module production in both China and non-China markets.
 

1. Frame

The frame of a solar module is essential for providing structural support and preventing mechanical stress. Most frames are made from aluminum, chosen for its lightweight properties and resistance to corrosion.

In July, the price of aluminum dropped to a three-month low on the London Metal Exchange. This decline has to do with continuing production expansions in China. Chinese aluminum output rose to a record high for a second straight month in July, which could be a positive development for module makers as it leads to lower frame production costs amid weak demand this year.

For non-China module makers, which may face additional tariffs on Chinese aluminum or seek to source from alternative suppliers, could experience higher costs and longer lead times, further influencing module production costs.

Aluminum production is also linked closely to energy costs, particularly since the industry relies heavily on coal-fired power plants. As energy prices fluctuate, so too does the cost of aluminum, impacting the overall cost of module frames. As manufacturers push for thinner, lighter frames to reduce costs, the industry faces a delicate balance between maintaining structural integrity and minimizing material usage.


 

2. Backsheet

The backsheet provides electrical insulation and protects the cells from environmental factors like moisture, UV rays, and mechanical damage. Generally, three layers compose one backsheet:

• The outer layer (the air side): UV resistant, wear resistant, and corrosion resistant. Generally, the outer layer should contain fluorine.
• The middle layer: Acts as a support layer and requires resistance to both high and low temperatures, stable mechanical properties, excellent electrical insulation, good creep resistance, fatigue resistance, friction resistance, and dimensional stability, with low water vapor permeability. Modified PET material is commonly used.
• The inner layer (EVA): Requires UV resistance, high-temperature resistance, and good adhesion to EVA/POE encapsulant.

Despite a shift toward bifacial modules, the share of glass-backsheet module production was 64% in 2023 and will reach around 77% in 2024. The share of TOPCon glass-backsheet module production was still less than 8% due to reliability concerns.

In addition to the supply-demand relationship, understanding the technological trend of backsheet is essential for module makers. Currently, TPC/KPC/CPC double-sided fluorine structures are the most commonly used. Among these, the CPC/FPf configuration quickly became the mainstream selection upon its introduction, thanks to cost advantages.
 

3. Junction box

The junction box ensures safe electricity transmission, playing a critical role in the module’s performance and longevity.

The cost of junction boxes is influenced by the price of materials like plastic and copper, as well as the complexity of the design. In China, where a significant portion of junction boxes are manufactured, rising labor costs and stricter environmental regulations have driven up production expenses. Additionally, the global semiconductor shortage has impacted the availability of key electronic components used in smart junction boxes, which are increasingly popular in high-efficiency modules.

For non-China markets, sourcing junction boxes can be challenging due to tariffs , shipping delays, and limited local production. These factors contribute to higher costs and longer lead times, complicating module manufacturing and potentially affecting delivery schedules.

4. Ribbon

Ribbons are used to connect the solar cells within a module. Typically made of copper or a copper alloy and coated with a thin layer of solder, ribbons are crucial for ensuring efficient electrical connections.

The price of copper, which is subject to global supply-demand dynamics, has been highly volatile, driven by factors such as mining output, geopolitical events, and the shift towards electric vehicles and renewable energy. Surging to the highest-level in May, copper price on the London Metal Exchange hit record low this week.

In China, the world's largest consumer of copper, demand remains strong, but local production has been affected by energy constraints and environmental policies, leading to potential supply shortages and price increases. Non-China markets, facing similar supply challenges, may experience increased costs for ribbons, especially if they rely on imported materials.

Understanding the cost, demand, and supply dynamics of components in the PV BOM list is critical for module manufacturers in 2024. Both China and non-China markets face unique challenges, but the common thread is the need for strategic sourcing, cost management, and adaptation to evolving industry trends.

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