The price of polysilicon, the key raw material for most solar modules, is set to drop below $40 per kg next year, as overcapacity reaches serious proportions, a report predicts.

The price erosion will help module companies but hurt polysilicon producers.

Germany’s Bernreuter Research estimates that total silicon demand will reach 130,000 tonnes in 2011, based on forecasts by Switzerland’s Bank Sarasin for global photovoltaic demand combined with additional requirements from the semi­conductor industry.

However,