Report: solar panel prices to plummet

The average price of solar panels will drop by over a quarter this year, as falling demand and increased supplies of polysilicon combine to drive down prices.

That is the conclusion of a new study from research firm IC Insights, which predicts that despite the reduction in upfront prices, global solar photovoltaic installations will fall by 22 per cent this year as a result of the recession and the scaling back of some European incentives.

However, the report also forecasts that the expansion of new incentive schemes in the US, China and Europe combined with the fact that the polysilicon supply shortages that dogged the industry in recent years have been largely resolved means that the sector will "come charging back in 2010".

It predicts that installations worldwide will rise by 37 per cent to 6.7GW next year, ensuring that despite the market contracting this year the annual compound growth rates for the period from 2008 to 2013 will still stand at around 25 per cent.

The report also predicts that the recent scaling up in global silicon production will also result in a shift in R&D priorities for solar firms, many of which have previously focused on developing ways to minimise the use of costly polysilicon.

In related news, the US Solar Electric Power Association last week released a new study showing that despite the onset of recession, the overall installed solar capacity among the top 10 US utilities still rose 25 per cent in 2008 to 882MW.

"This year's report demonstrates that solar electricity is finally on the radar screen of utilities across the country," said Julia Hamm, executive director of the Solar Electric Power Association. "Solar plants large and small are ready for significant build-out, and the utility industry is moving quickly toward mass adoption to meet a variety of business needs."

The report, which crowned Pacific Gas and Electric as the leading player in the market with more than 84MW of installed capacity, also predicted that further large increases in capacity are on the cards as more large-scale solar farm projects come online over the next five years.