Solar-Energy Loses Some Shine

Solar-energy companies are feeling the pinch of the global downturn, leading investors to dump what had become popular growth stocks.

Particularly damaging to the global market for photovoltaic solar panels, which transform sunlight into electricity, has been the collapse of demand in Spain, after the government cut what had been generous aid for the sector.
Spain accounted for more than 40% of all new solar panel installation globally last year, installing 2.7 gigawatts — five times the 2007 figure — out of a global total of 5.6 gigawatts. According to Spain’s photovoltaic industry association, Asif, the country’s market was worth €16.38 billion ($23.24 billion). This year, with cuts to aid and a more complicated application process, there has been no new installation in Spain.

Other countries are introducing aid to the solar sector, particularly the U.S. But the new U.S. measures aren’t expected to arrive in time to shore up demand this year. And while China has pledged support for the solar industry via economic-stimulus packages, support is likely to primarily benefit its own low-cost producers that have easy access to credit from state-owned Chinese banks.

Second quarter results painted a bleak picture of the problems faced by Europe’s solar-power companies.

While European firms idle production and reduce costs and jobs, Chinese firms such as Suntech Power Holdings Co. and Yingli Green Energy Holding Co. continue to increase solar-cell production in a global contest for market share, Henning Wicht, senior director of the iSuppli consultancy in California, said in a news release last week.

As a result, global production of solar panels is set to rise 15% this year to 7.5 gigawatts, from 6.5 gigawatts in 2008, and will add to oversupply, Mr. Wicht said.

But Mr. Wicht expects new solar installations to dwindle to only 3.9 gigawatts globally this year. That would be 30% less than the 5.6 gigawatts installed last year according to data by the European Photovoltaic Industry Association. “This inventory glut will have a long-term impact on the solar business, with panels set to remain in a state of oversupply until 2012,” he said.

Wall Street Journal (through Google News)