Is it lights out for some solar panel manufacturers?
The stocks of solar panel companies have dropped precipitously in response to slowing demand and a glut of panels from Asia that has battered margins, MarketWatch reports.
Shares of American solar company First Solar, Chinese firm Suntech and Spain's Iberdrola are all down as global economic stagnation sets in. Standard & Poor's Global Clean Energy Index is down 41 percent year-to-date, much more than the broader S&P 500 index, which is down 11.3 percent.
A few factors in the drop:
- Demand for solar panels in Europe (Italy, Germany, Spain) has slowed as governments cut solar incentives and financing for new projects. The problem: Europe accounted for more than 80 percent of demand last year.
- Chinese and other Asian manufacturing are still pumping out solar panels faster than the market can absorb them.
- One bright spot: Solar demand in the U.S. and China has been growing, albeit slowly.
- In 2011, manufacturers will ship 18 gigawatts or more of solar panels, up from 17.4 GW in 2010. But with the lowest prices nearing $1 a watt, some will never make it out of inventory.
- The recent bankruptcy of Californian firm Solyndra gave the industry's reputation black eye.
In the U.S., there remains a lack of consistent policy for renewable energy companies, setting the stage for further consolidation as new technologies give way to commercialization.
So what do you do when you've ramped up to manufacture the future and the bottom suddenly falls out? Sell. Several solar companies are looking to big, cash-flush oil and gas companies for stability, including SunPower (which sold a controlling stake to Total) and Chevron, which yesterday announced the world's "largest solar enhanced oil recovery project," ironically using solar power to produce oil.
Photo: Masdar City, Abu Dhabi, UAE (Suntech)