Solar panel oversupply to continue to 2015

The oversupply of solar panels on the world market will not be absorbed until 2015, according to a recent report by renewable power consultancy GTM Research. Global production capacity for solar panels currently sits at around 59 gigawatts (GW), while expected demand for the year is only around 30GW.

The oversupply has occurred due to a number of factors, including the massive amounts of stock produced by global solar manufacturing leader China and waning solar power subsidies in Europe. “The training wheels of subsidies are coming off, and the next few years will see the industry’s first attempt to ride without support. Consequently, the next three years will be an extremely difficult period,” GTM analyst Shyam Mehta said. “Most current PV manufacturers will have to take a long, hard look in the mirror and make touch decisions about their future role in the industry.”

The price of solar power has dropped dramatically in recent years, thanks in part to the same factors that are now causing hardship on the supply side of the industry–government subsidisation and a dramatic upscaling of production. GTM has predicted that prices are likely to go as low as 45c per watt (W) by 2015. Currently, average prices sit at around 70-85c per watt.

While falling prices coupled with government support for solar power have been a boon to households and installers globally and in Australia, the growing competition has resulted in increasing pressure on solar module manufacturers to lower prices. The past 2 years have seen a number of panel manufacturers succumb to financial pressures–a number have folded or been bought out, and many are currently operating at a loss or on thin margins, simply trying to weather the storm until demand begins to meet supply. The less efficient players are expected to drop out of the game as time goes on, with the industry as a whole reaching a sort of equilibrium in the next 4 to 5 years.

In the meantime, the price of electricity is slated to rise across the country, making solar PV an increasingly attractive investment, even as subsidies are gradually reduced.

Source: Reuters via Climate Spectator

© 2012 Solar Choice Pty Ltd

James Martin II