Solar Power Drops In Cost; May Cause Failure of Half of the Current Manufacturers

What kind of news is that? Not the good kind, certainly. Yet that is what an industry analyst is saying.

The problem appears to be that the economy has sapped the ability of the resellers to quickly empty out the warehouses of the manufacturers. The lowered pricing, along with the panel glut, has created a bad scene for the industry.

Does this not sound like it is time for the government to step in, leading the way with huge buyouts of inventory, to convert the many government buildings across the nation?

from Barron’s

Half of the existing solar manufacturers may not survive through the end of next year, according to the market research firm The Information Network, as reported by DigiTimes.

The piece said Information Network chief Robert Castellano believes “massive inventory buildup and huge overcapacity” are having a serious impact on solar panel manufacturers. The industry is up to 122 days of inventory, from an average 71 days in 2008, he reports. Capacity utilization in the industry is down to 27.9%, from 48% last year.

A key issue, he contends, is increase supply from China.; as they have ramped up, ASPs have dropped to $1.80 per watt, from $4.05 in Q3 2008. And he expects the trend to continue, with more capacity coming on line as manufacturers seek economics of scale. The result, he thinks, will be worse conditions still: he expects inventory to stretch to 133 days next year, with utilization falling to 25.7%. ASPs, he predicts, could drop below $1 a watt next year, and to 50 cents a watt in 2011. If that happens, he says, up to half the more than 200 solar manufacturers won’t survive.

It certainly seems as though the government should be the one to take advantage of lowered pricing, while looking like the good guy to save private industry at the same time.

It is certainly not the time to have a stutter in the adoption of solar, if anything, a surge is what we need.

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