Solar Panel Makers Face Supply-Glut ‘Armageddon’: Chart of Day
The CHART OF THE DAY shows the supply of photovoltaic panels may climb to almost triple the level of demand next year, flooding the market and potentially crashing the price, said Gordon Johnson, Axiom’s New York-based solar power analyst.
“It could be Armageddon,” he said in an interview. “Demand is about to fall at a time when you’re going to have a significant increase in supply. In a commoditized industry, that is a formula for disaster.”
Manufacturers have sold a record number of panels this year as developers rushed to connect them to the grid and lock in subsidized power prices before the rates are cut by governments in Germany, Italy and the Czech Republic. In Germany’s case, the world’s largest panel market, demand will fall in 2011 after the state cuts rates producers earn by 13 percent, Johnson said.
That will glut the market next year for photovoltaic panels, which turn sunlight into electricity, and drive the price manufacturers can charge down to as low as $1.10 per watt from about $1.80 this year, Johnson said.
Revenue may be undercut for panel-makers from Tempe, Arizona-based First Solar Inc. to JA Solar Holdings Co., the Shanghai-based company that got a $4.4 billion credit facility for expansion this year from a Chinese state-owned bank. JA Solar alone added 0.5 gigawatt of factory capacity in the second half, or 5 percent of global demand forecast for next year.
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