For now, profit margins for many companies are suffering from tumbling prices. The trend has been exacerbated by growth of efficient, low-cost producers in China, analysts say. (Some solar companies assert China is unfairly beating the U.S. on pricewith the help of government subsidies, and is dumping product here below cost).
Solyndra, for instance, “was based on a business model and was able to get funding for a $2 per kilowatt hour cost structure,” says Stephen Simko, as senior stock analyst at Morningstar. “Clearly that’s not a winning proposition.”
The other problem is investors and installers are reluctant to commit to new projects if they think prices are still falling, says O’Connor.
In 2008, the then-faltering solar market was lifted from the doldrums by generous subsidies in Italy. But governments struggling with weak finances are unlikely to step up and spur the market with subsidies today, analysts say.
Instead, analysts expect falling prices will eventually make solar a more cost-effective alternative energy source, widening its appeal and creating demand from a wider array of countries.
New demand will come from what O’Connor describes as emerging solar markets, mainly China and the U.S. Smaller markets in Malaysia, Thailand, India and the Middle East will also emerge.Page 3 of 5 | Prev Page | Next Page