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Cheaper Solar Panels
Wednesday, November 30th, 2011 at 10:59 am

More Sun for Less. When Mrs.Juachi Osai looked into putting solar panels on her proposed new home in Ajah, Lagos, last year, she decided she could not afford it. “I had no idea solar was so expensive,” she recalled. But the cost of solar panels has plunged lately, changing the economics for many homeowners.

Solar panel prices are falling and some buyers appear to be holding off purchases in the hopes of even cheaper prices, confounding installers’ business plans. Worldwide, demand is up by 20 percent compared to the previous year, but a major shift is still taking place as the US and China finally start installing photovoltaic’s themselves. Though it does not come as a real surprise, another salient finding is that Western manufacturers have begun to slow down production in light of the stockpiles on inventory, but leading Chinese firms continue to manufacture and ship unabated.

Prices for the panels that turn sunlight into electricity have slumped as much as 40 percent this year, with much of that decline coming between May and July when companies unloaded their inventory onto the market.

So much for the past – the question is what the future holds. Estimates show that solar panel prices could fall 18 percent in the last quarter of 2011 alone after the one-third reduction in prices over the past four quarters. Solar cell manufacturers are apparently also planning to far outstrip demand with their expansion plans. Therefore estimating that inventory will skyrocket to more than 20 gigawatts and continue to stay ahead of total demand unless production is ramped down even further – which seem unlikely in light of Chinese firms’ current plans. If anything, production seems very likely to continue to be concentrated in Asia as Western firms continue to shrink or disappear altogether.