Cheaper solar seen spurring demand, hitting producers

LOS ANGELES (Reuters) – A dramatic fall in the price of solar panels has made the clean power source a better deal than ever before, but solar manufacturers’ profits have dwindled thanks to that rapid decline and many may not survive to see solar bargains evolve into booming customer demand.

Skyrocketing demand for solar power was a bright spot in the global economy for much of last year until a pullback in solar subsidies in Spain and frozen credit markets dried up access to project financing choked off demand, sending panel supplies soaring and prices into a free fall.

After hitting $4.20 a watt in the middle of 2008, solar panel prices have slid almost 30 percent to about $3 a watt, with research firm New Energy Finance predicting a further 20 percent drop this year.

That is good news for solar customers, analysts say, as the cost of the renewable energy source approaches that of power generated from dirtier sources such as natural gas and coal.

“It’s a great thing,” said Barclays Capital analyst Vishal Shah. “The pain that we are seeing in the industry right now is going to manifest into stronger growth in 2010 because prices are so low.”

Reuters UK