Demand, prices for solar panels on the uptick
After long slump, new photovoltaic demand may push solar panel prices up in 2010
Dave Hannon -- Purchasing, 11/23/2009 3:01:58 PM
Panels being manufactured at a Suntech plant.
The long decline in solar panel demand and prices officially ended in the third quarter, say panel producers, and now it's a race to keep capacity up with demand.
After a long decline, orders for solar panels shot up in the third quarter, primarily due to a spike in demand from Germany, the world's biggest solar market. Germany's Solar Industry Association (BSW) this week said the nation plans to add up to 3 gigawatts (GW) of photovoltaic capacity this year due to unexpectedly strong demand in the final months of 2009, according to Reuters.
But it's not just Germany driving the solar turnaround. "Solid demand growth is returning as markets pick up in the U.S. and China," said Sanjay Shrestha, an analyst at Lazard Capital Markets in a Bloomberg report. "During the downturn these guys did a really good job taking their foot off the pedal."
Even Algeria has announced plans to open a solar panel factory, according to reports.
In the U.S. solar panel producers have announced plans to increase production in 2010. Both Suntech Power and Trina Solar aim to increase production capacity. Suntech plans to boost capacity 40% to 1,400 megawatts by mid-2010 and open a new assembly plant in Arizona, which will use solar cells shipped from China. Trina said shipments nearly doubled in the third quarter and aims to increase cell and module production to 600 megawatts by the end of this year and to as much as 950 megawatts next year.
"The market is gaining momentum faster than anyone expected," Suntech's CEO Zhengrong Shi told Bloomberg. "We have to expand really fast. In the third quarter, we couldn't keep up with demand."
As reported on Purchasing.com, DuPont said it plans to increase photovoltaic capacity as well.
With increased demand, solar panel prices are likely to moderate after a long slide. But panel prices' exact direction-up down or flat-is a matter of debate.
Piper Jaffray analyst Jesse Pichel says panel prices will still likely fall 10-15% in 2010, which are "more normalized" price declines. And Reyad Fezzani. CEO of energy giant BP's solar division, agrees saying recently he expects panel prices, which plunged as much as 50% this year, to return to a more normalized rate of decline.
But Suntech expects prices for panels to stabilize or rise slightly in the first part of the year.
Now Playing: 
