Solar Prices Drop, Deeper Discounts Expected

As many industry insiders have predicted, solar-equipment prices are indeed falling as supplies are growing faster than the demand in a bear economy. According to Solarbuzz’s February price survey, U.S. panel prices have fallen 4 cents since December to $4.81 per watt of peak capacity, while European panel prices are down 6 euro cents to €4.62 per watt. In the last month, they have fallen 3 cents and 1 euro cent, respectively.

That may not sound too dramatic, but some companies say they are seeing larger price cuts. The anecdotal evidence could indicate that wider declines are coming or just that some buyers are getting better deals.

Mike Hall, president of installer Borrego Solar Systems, says he’s seen solar-panel prices drop some 15 percent in the last few months, and he calls this the first “real drop” in PV prices in the last three or four years. “They’re back to where they were when I started in the industry in 2002,” he says. “There’s no question they’ve dropped a lot and across the board. I haven’t heard of anyone who hasn’t been affected by price, some more than others.” Borrego Solar ditched its residential solar division last week.

The lowest prices have reached $3.57 per watt for a thin-film panel, $3.89 per watt for a monocrystalline panel and $3.99 per watt for a multicrystalline panel, according to Solarbuzz.

Jenny Chase, a senior associate at New Energy Finance, predicts prices could plummet as low as $2.40 per watt. The admittedly “very bearish” view would represent a 40 percent drop from the $4-per-watt prices she saw in the third quarter of last year.

But Chase adds that she expects to continue to see a spectrum of prices, with some companies — such as those with better reputations or higher-efficiency panels — commanding higher prices than others. “I think customers would rather buy from a company that is transparent and that has a warranty they think is worth something, rather than buying from a company that might not be able to replace their panels, if they didn’t work,” she says.

Despite some companies able to negotiate higher prices, this year is looking dark for solar across the board. Last week, Lux Research said it expects cell and module capacity to reach 10.4 GW, outpacing demand nearly twofold, and the overall market will shrink to $29 billion and 5.3 GW, down from $36 billion and 5.5 GW in 2008. Lux senior analyst Ted Sullivan said, “While oversupply in the solar market has been looming for some time, the correction has been more aggressive due to the economic crisis.”

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