Bloomberg News

Solar Sales May Drop for First Time as Rates Cut, BNEF Says

October 05, 2011

(Updates solar index in seventh paragraph.)

Oct. 5 (Bloomberg) -- Sales of solar panels may decline for the first time in 2012, leaving manufacturers with mounting inventories and excess capacity, according to a Bloomberg New Energy Finance analyst.

“New capacity in 2012 is likely to be flat if not lower than this year after significant drops in subsidies in key European markets,” Martin Simonek, a solar analyst at the London-based research firm, said in an interview. “That demand during 2011 has been stronger than last year has helped many companies stay alive. Next year will be different.”

Photovoltaic plant developers may install as little as 23.8 gigawatts of new panels next year as European governments reduce subsidies for the technology, according to the London-based researcher. That compares with at least 24.5 gigawatts forecast for this year, a 40 percent increase from 2010, and double-digit growth since 2007.

Low-cost manufacturers in Asia boosted production after installations more than doubled last year, leaving developers scrambling for equipment as subsidies in Germany and Italy fueled demand. As those new lines start producing, European governments are cutting support for solar energy as they work to keep a lid on electricity costs amid an economic slump.

Optimistic Forecast

Simonek’s forecast is more optimist than some from banks and companies. Goldman Sachs on Sept. 19 lowered its forecast for next year by 10 percent to 20.8 gigawatts, compared with an estimated 19.6 gigawatts this year. Deutsche Bank AG analyst Vishal Shah expects 21 gigawatts in capacity this year and 25 gigawatts in 2012, according to an Oct. 2 note to clients.

Wacker Chemie AG, the second-largest solar-grade silicon maker, sees 22 gigawatts to 26 gigawatts this year, according to a presentation seen by Bloomberg last month. In contrast, Yingli Green Energy Holding Co., a Chinese solar panel manufacturer, forecasts 18 gigawatts to 19 gigawatts this year.

The Bloomberg Global Leaders Solar Index rose 0.8 percent at 10:40 a.m. in New York today after this week reaching its lowest level ever. The index, which started in August 2005, has lost 67 percent this year.

“If oversupply continues to force prices to drop fast next year, many companies will be priced out of the market and forced out of business,” Simonek said by phone. “And while growth in supply has been much weaker this year than during 2010, significant oversupply still is expected in 2012.”

Panel installations this year may reach as much as 29.4 gigawatts, while the upper end of its forecast for 2012 is 31.8 gigawatts, according to the analyst.

Stagnant Demand

Stagnant demand next year would lead to panel inventories increasing at warehouses and the possibility of write-downs on unsold stock, Simonek said. Inventories that built up during a second-quarter slowdown are now largely depleted due to higher demand in the second half of the year, he said.

Average prices for solar panels have dropped by almost 40 percent this year, New Energy Finance data shows.

Demand may gain in 2013, when cheaper panels make solar energy competitive in more sunny nations and developing economies, Simonek said. Still, growth driven by homeowners looking for cheaper power from rooftop panels will be slower than for that driven by subsidies, he said.

--With assistance from Gelu Sulugiuc in Copenhagen. Editors: Reed Landberg, Stephen Cunningham.

To contact the reporters on this story: Marc Roca in London at mroca6@bloomberg.net; Ben Sills in Madrid at bsills@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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