Analysts call time on solar panel glut

The global solar energy industry received an early Christmas present last week, with the news that the end is in sight for the glut of solar panels that has dogged the market for much of 2009.

According to a study from industry analyst iSuppli, higher than expected demand from Germany in recent months means that the oversupply of panels is past its peak.

Experts had expected that recent moves to cut solar subsidies in Germany would affect demand. But with the price of solar panels having fallen by between 20 and 30 per cent this year, demand has picked up in recent months, prompting analysts to shift their forecasts.

ISupply said it now expected global supply of solar panels to exceed demand by about 66 per cent, down significantly from its forecast in the summer that supply would exceed demand by 92 per cent.

‘Solar panel installations in Germany began surging to record levels in July as prices for photovoltaic systems plunged,’ said Henning Wicht, senior director of photovoltaics research for iSuppli, in a statement. ‘This phenomenon has boosted the global solar panel business and mitigated the severe oversupply situation that has stung the industry throughout this year.’

The analyst added that as a result, it now expects that the oversupply that has characterised the market since the onset of recession led to falling demand, could end before the end of 2010.

The report echoes projections from leading solar energy firms, many of which recently posted disappointing third-quarter results but insisted they were already seeing signs of recovery.

The news rounded off a good week for the global solar energy sector, which also saw the US Congress unveil new legislation that would extend the tax credits offered to solar farm developers to cover domestic solar manufacturing plants.

Democrat Senator Debbie Stabenow, who tabled the bill alongside Republican Congressman Dave Camp, said that the move would bolster the competitiveness of the US solar energy sector.

In related news, Chinese solar panel manufacturer Suntech announced yesterday that it is to build its first US manufacturing plant in Arizona, while the Chinese government also announced that it has identified 294 solar projects for participation in its first solar power pilot programme.

Under the so-called ‘ Golden Sun’ initiative, about 642MW of new solar energy capacity is expected to come online within the next three years, with the government providing half the investment for large-scale solar farms and 70 per cent of the cost of smaller-scale independent projects operating in off-grid regions.

The Ministry of Finance said that overall, the 294 projects would cost about 20bn yuan (£1.8bn).

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