Prices are dropping….Fast! Solar modules that were about $1.85USD per watt about six months ago are nearer $1.25USD per watt now. Part of this is a rapid expansion of capacity based on the expectations of continued double digit growth in various markets. The turmoil in the Italian market sent shockwaves across an industry which is still maturing in how it deals with the ebbs and flows of the marketplace.
The reduced prices are further encouraging governments to scale back incentives, based on the beliefs that they are not as needed as before. Not quite. Solar remains pricier than the grid in many places and it won’t be a while before it achieves grid parity (although we are getting there). The glut has led several analysts to state that they expect some consolidation in the market in 2012. Once again…how do the medium sized players survive if financing becomes challenged for their business model ?
So we are likely to see consolidation in 2012, followed by a slow-down in production capacity investment, and then a take off later in the year. Prices are likely to remain depressed and will never really go far back up. The reality is that there is strong momentum for renewables taking a larger and larger pieces of the energy pie, and it won’t be during this solar bloggers lifetime that this momentum is turned back. What may happen….eventually we won’t call renewable energy “renewable” anymore, and perhaps label “dirty energy” as it should be.