The solar market has already seen excessive supplies comparing with demand. For example, for the photovoltaic solar panels, supply this year is expected to hit 7.1 gigawatts, or 7.1 billion watts, the annual capacity of a medium-sized nuclear plant. At the same time, demand is only expected to stay at 4.3 to 4.5 gigawatts this year.
The supply forecast number “excludes all of the thin-film manufacturers,” said Gordon Johnson, an analyst at Hapoalim Securities. Thin-film and photovoltaic (PV) sectors are the two major technologies in solar panel manufacturing. Including thin-film manufacturers, solar supply gets much bigger. When tighten credit makes property owner more conservative to install solar panels, the market demand is decreasing significantly. That’s the same challenge that both U.S. and Chinese companies have to face.
“Things will remain challenging for the solar companies,” said Johnson. For U.S.’s PV solar panel manufacturers, SunPower’s “cost to manufacture a panel is significantly higher than the Chinese guys,” said Johnson. That’s why the company is emphasizing on cutting cost via transferring their plants to Asian countries.
Shares of major solar producers have come under heavy pressures. For example, SunPower Corp. (SPWRA)’s share prices recently fell back to around $23, down from September’s $34. SunPower reported its third-quarter earnings of 13 cents a share on revenue of $446 million, compared to 29 cents a share during the same quarter a year ago.
For SunPower, the timing of large scale installations will continue to be uncertain as permitting and other administrative requirements have very long lead-times, analysts said.
SunPower’s vice president Julie Blunden said cost is the problem they’ve tried very hard to solve in the past year and became not the major disadvantage in competition with Chinese peers, as the company is moving some of its production to low-cost regions. Last year, it opened plants in China, Philippine and Mexico.
“The fundamental dynamic right now in the industry is still a lack of a long-term view on demand,” said Blunden, although the solar-panel maker in July noted positive momentum in the residential and commercial businesses.
