Yesterday, iSuppli reported that solar panels will be oversupplied for the next few years leading to a decline in solar panel prices and a shakeout in the industry.
With the economy in the toilet, fewer companies are ordering installations of solar cells. iSuppli projects a 10% increase in installations for 2009 versus 2008, as opposed to 2008, when year over year growth was 50% and 2007, when y/y growth was 40%. In 2010, iSuppli anticipates the solar industry returning to it’s higher growth rates.
Even though demand growth is falling for installations, production continues to skyrocket, which will lead to a drop in the price of panels. The demand for polysilicon, the material used to make photovaltaic cells, is expected to jump 34%, while the production will rise 112%. In 2008 the polysilicon sold at $400 per kg, in 2009, iSuppli sees it dropping to $250, then $150 in 2010. The price of solar modules will also drop significantly in the next year from around $3.50 per watt today to $2.50 per watt in the next year.
With prices coming down, many solar companies will be forced out of business, unless they get lean in a hurry and figure out how to lower their costs.
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