Rising solar output could hit producers’ margins

Solar companies’ success in ramping up new production lines and factories could leave the fast-growing renewable energy market awash in solar panels next year, driving down prices and profit margins in the nascent industry.

The recent move by this year’s hottest solar market, Spain, to cut its cap on subsidies for new solar panels has sparked fears that big producers may see their selling prices drop by as much as 20 percent as they scramble to sell out their production.
Those producers include U.S.-based SunPower Corp , Germany’s Q-Cells and China’s Suntech Power Holdings .

At an industry conference earlier this month, SunPower Chief Executive Tom Werner told Reuters that the top U.S. solar company was prepared for a 10 to 20 percent drop in prices next year, sparking a broad global sell-off in solar company stocks.

A price decline of that magnitude would likely erode profit margins at solar companies that have been striving to cut costs in an effort to make the technology more affordable.

Guardian