Aug 22 2008
Solar energy (PV) module production capacity will be almost twice as great as global market demand for PV by the end of this year. This could lead to an oversupply situation and can put many manufacturers in a difficult position.
The growing gap between supply and demand anticipated over the next few months could hit the solar industry hard. Since the solar industry is still largely dependent on government support and/or incentive schemes, demand is extremely vulnerable to changes in these schemes.
The Spanish government is still having discussions about a new feed-in tariff for 2009-2010, based on proposals for a cap on new installed power of 300 MWp. This would reduce the installed power in 2008 by at least 75%. In Germany the feed-in tariff will decrease by 9%. The US market is still waiting for the tax credit to be continued in 2009. With no certainty about incentives, growth in system sales could slow down at the end of 2008. Markets with a solid feed-in tariff structure, like Italy, France and Greece, are growing rapidly. The installed power in Italy is increasing exponentially, and figures for France and Greece will also be excellent over the coming years.
But are these relatively new and small markets capable alone of offsetting the slowdown in demand from Spain?
These dynamics will have a substantial impact on the solar industry. To remain competitive, manufacturers will have to lower their prices. It appears that this price drop could be possible in the medium term, as the UK-based New Energy Finance forecasts that contract silicon prices could fall 67% by 2013. But will manufacturers be able to drop their prices in the short term? Which companies will survive the oversupply situation and which companies won't? And, more importantly, which are the biggest potential growth markets in the short term and what is the best strategy for tackling the imminent situation?
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