Blog Post

Suntech CEO: Solar Panel Glut to Slash Prices by 30% in 2009

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

For more than two years, solar and semiconductor companies have predicted that a glut of polysilicon coming online in 2009 would drive down their costs. Today Suntech Power Holdings (s STP) CEO Zhengrong Shi put a number on the shift, saying in an interview with Reuters that he expects oversupply and top-to-bottom cost cuts to help drive the company’s prices down 20-30 percent compared with the third quarter of this year. The sector as a whole could slash prices by half as soon as 2013, he added.

Hot on the scent of a company within striking distance of grid parity, investors sent Suntech’s stock soaring (reports of the solar industry’s lobbying efforts at the UN climate talks in Poland combined with an overall market rally that saw major indexes surge couldn’t have hurt, either). Shares climbed as much as 24.4 percent to change hands for $10.58 — more than double the target set by HSBC Global Research in a new report.

Shi’s forecast actually echoed the predictions of a Lux Research report published last month which forecast that solar module supply would overtake demand beginning in 2009 (sound familiar?), causing prices to tumble (there we go again). What Shi did not get into is the industry shakeout expected to result from all this volatility. Lux anticipates it will be most damaging to small players, which Suntech is not. But it does rely heavily on the European market for sales, making it vulnerable to a resurging U.S. dollar. More importantly, it may not be able to take full advantage of the long-anticipated polysilicon glut, since, according to HSBC estimates, about 80 percent of its supply contracts remain locked in at higher prices.

When the company reigned in its fourth-quarter outlook last month, it announced it had begun renegotiating unfavorable short-term polysilicon contracts. In 2009, it will face bigger changes than that — starting with the shifting landscapes of energy and credit markets. As for politics — in the U.S., China, and internationally — the company has already jumped in with both feet.

21 Responses to “Suntech CEO: Solar Panel Glut to Slash Prices by 30% in 2009”

  1. The only thing that prevents the adoption of solar PV are the exorbitantly installation prices. Solar PV are getting easier to install, not costing more than $750 in terms of labor time for a 8.5 kW system over a clay tile roof. But the solar installers will be charging $25,500 for such installation. The only impediment to full scale adoption of solar PV are the installers. Many people should go into this lucrative business and there is so much room to compete, and hopefully the installation cost should go down to as little as $1,000 for the 8.5 kW system.

    The solar PV companies and the government should have cheap certification programs for DIY installed solar PV’s. They don’t require rocket science mind to install solar PV.