Tuesday, November 25, 2008

Analysts See '09 Panel Prices Dropping

Part 1 of a two-part projection

There has been a lot reported about solar panel pricing for 2009. Some analysts see panels dropping others, like me, see them holding. Very few see panels rising in cost but that cannot be discounted either. Let's review.

The Information Network market research firm contends solar will continue to grow about 40% and key growth drivers such as the price of oil, polysilicon shortage and government subsidies will have a lesser effect on panel pricing (Michael McManus, Digitimes 11/19/08). Considering solar still cannot compete with conventional energy sources, an oversupply of panels can be seen short-term.

"The Information Network noted that utilization rates at solar plants are only 56% and its analysis of 103 solar manufacturers showed that panel production capacity in 2009 will be 15GW whereas only 8.3GW will be sold."

After next year, says the Network report, players in the solar market will still face varying market dynamics even as the solar industry grows. (Editor: Really? Isn't change the only constant in life?)
"High oil prices have been driving demand for solar panels but with oil prices dropping to $60 a barrel, there will be a lot less interest in alternative energy. While this may be a short-sighted view by companies, the economic realities of the global economy--highlighted by the credit crunch--mean that even those companies that want to build solar plants may have difficulty finding funding."
The Information Network report said the past shortage of polysilicon for standard panels led to a surge in thin-film panel demand. However, a counter-surge in polysilicon plants has increased production and likely will reduce demand for amorphous silicon thin-film PV with efficiencies below 8%. This will impact equipment companies like Applied Materials and Oerlikon.

The Wall Street Journal's Market Watch reported that polysilicon pricing is not only "pressured by a coming supply glut" but that the current credit crisis will drive down demand for solar panels, the biggest users of silicon ("Polysilicon prices fall to earth", Laura Mandaro, Nov. 22, 2008)

Global warming concerns and high energy costs charged up the demand for solar panels in the recent past, the article said. Stocks of solar panel makers and silicon suppliers sold off sharply recently on concerns the credit crunch is causing solar power projects to be postponed if not actually shelved. In fact, Suntech, China's premier panel maker, slashed its fourth-quarter revenue forecast. In the process, panel pricing could continue to fall.

Some 60 new companies have joined the polysilicon market during the past two years; 90% of prior manufacturing had been handled by just seven suppliers, the Market Watch article reported. Global supply of polysilicon will double in 2009, likely outpacing demand growth of 34%.

This blogger contends other factors--not considered by these analysts--could hold panel pricing flat during the new year. Part 2 will explain.


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