Clouds over the Solar Power Industry

As oil prices have plunged, solar has become less cost-competitive. And the credit squeeze has made it harder to finance solar projects
The roof of a warehouse equipped with solar panels in Buerstadt, Germany, the largest such installation in the world. Ralph Orlowski/Getty Images

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.

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