On Friday, the snarky “Lex” column of the Financial TImes took a rather dark view of the current situation:
What looked only last year like a shining future for the solar industry has flared into a supernova, incinerating profits and share prices. Demand for photovoltaic panels had been growing at 45 per cent annually from 2000 to 2008, but the industry underwent an aggressive expansion at the wrong time. Finished panel capacity is at about 9,000 megawatts while demand has contracted from about 6,000MW last year to 4,500 in 2009, according to BarclaysWIth a glut of panel production due to last until 2012, Lex predicts a brutal price war that wipes out the less efficient producers.
The recession is partly to blame, but so is Spain. Accounting for nearly half of global installations last year, Spanish demand is expected to fall from 2,500MW to about 300MW after subsidies were slashed.
The solar industry’s gold rush mentality and its unhealthy dependence on subsidies are to blame for its travails. The only positive is that private over-investment will make panels cheaper, giving taxpayers who sustain solar power worldwide a better deal.Whether or not industry officials agree with Lex on the subsidies, “he” is exactly right on the investment. The entire industry’s success will be determined by its ability to drive down the learning curve, both to get manufacturing yields up and production costs down.
The existing firms need to utilize the funding that they already have — from customers, government and investors — to focus on efficiently serving existing pockets of customers that are managing to buy during this economic slowdown.