Plunge in photovoltaic (PV) solar panel costs

Published by The Editors | Filed under photovoltaic

Prices of photovoltaic solar panels have plummeted, and should continue to fall over the next 3 to 4 years. This is because supply of panels has drastically increased just as the global economic slowdown has killed demand.

Then the market did its job. The profits led such polysilicon manufacturers as Michigan’s Hemlock Semiconductor to expand their factories or build new ones. This year, Hemlock added 9,000 tons of capacity, almost doubling its output. By 2011, it will be able to make 36,000 tons annually. More than 50 new companies have also entered the market in the past two years. Solar-panel makers have kept pace, building factories around the world. Now, the global financial crisis, the decline of the euro, and a severe slowdown in some key markets have walloped demand. Supply of solar panels “appears to be overwhelming demand as we move into 2009,” reports Merriman Curhan Ford analyst Brion D. Tanous.

Spot prices of silicon have plunged and the prices of solar panels have sunk to $3 per watt, with more declines predicted. “The solar PV industry could be facing very hard times over the next two years,” says Edwin Koot, CEO of SolarPlaza.com, an industry group based in the Netherlands. Analysts predict a wave of consolidations. “The smaller solar players probably won’t be able to survive,” says Christine Wang, an HSBC Securities analyst in Taiwan.

This will make for a great market for consumers looking to power their homes with photovoltaic solar panels. From the data, it also looks like the buyer’s market will continue for a couple of years, until demand ramps back up again to take advantage of the low costs.