Renewables Threatened Clouds on the Horizon for Solar Power Industry
As oil prices have plunged, solar has become less cost-competitive. At the same time, the credit squeeze has made it harder to finance solar projects.
If the recent five-year boom in solar energy marked the birth of a global industry, the next half-decade should be its coming of age. But like most adolescents, solar is experiencing growing pains. The economic crisis has weakened demand for everything from polysilicon to rooftop panels, just as manufacturers have spent billions expanding production. The overcapacity has caused prices to plummet and left the industry financially exposed. A number of companies -- especially startups --may not survive a shakeout that could last 18 months or longer.
A man looks over a 40,000 square meter roof-based solar system -- the world's largest -- in the southern German town of Bürstadt.
Consider the story of Peng Xiaofeng, chairman of China's LDK Solar, a maker of solar wafers. During a recent trip to Europe, he toured major solar projects that have been, in some cases, on the drawing boards for two to three years. "They're all delayed," Peng says."I don't think they'll be ready [even] in 2010 or 2011."
The industry impact has been swift. After increasing at roughly 50 percent annually every year since 2004, the overall market for new solar installations could slow to just 15 percent growth in 2009, according to analyst estimates. Retail prices for photovoltaic panels may fall by as much as one-third in 2009 because of a continued glut. Adding to the gloom: Spain and Germany, the world's top two markets for PV panels, have recently trimmed the subsidies they offered to jump-start local industries. "We're moving from a seller's to a buyer's market," says Adel El Gammal, secretary general of the European Photovoltaic Industry Association.
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