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“What we’re seeing is that falling panel prices are making solar PV (photovoltaic) more cost-effective today,” says Colm O’Connor, portfolio manager at Kleinwort Benson Investors, subadvisor to the Calvert Global Alternative Energy Fund. “In some markets we see solar energy becoming competitive, minus subsidies, with retail electricity prices in 2012.”

For now the industry’s troubles are worse than the broader market because seven-tenths of the 100 percent growth the industry experienced in 2010 was driven by accelerated demand in Europe.

That demand has fallen off amid the euro-zone’s economic travails, shrinking bank lending in Europe, and a decrease in government solar subsidies in two of the industry’s biggest markets last year, Germany and Italy, say analysts.

To Jesse Pichel, a clean-tech analyst at Jefferies, the biggest culprit is a tight lending environment, in which banks “view solar as a low priority,” and buyers wait for panel prices to hit bottom.

“If we can get some improvement to consumer sentiment and financing, this industry should explode, and I would anticipate we would have very strong growth on the other end of this financial recession that we’re in,” Pichel says.

Prices And Profits

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