Report: Solar Panel Revenue Could Drop 20% in 2009

If you are convinced that next year will be a painful one for solar, then check out the latest figures from market research firm iSuppli: Revenue for the global solar panel market is expected to plummet nearly 20 percent in 2009.

That would be a drop from $15.9 billion in 2008 to $12.9 billion in 2009, coming after solar panel companies have experienced eight years of growth.

Blame it on the oversupply of panels. There will just be too many companies making them and not enough demand to erect them all. The problem already has occurred: The industry produced 7.7 gigawatts worth of panels in 2008 but installed only about half of them, said iSuppli’s solar analyst Henning Wicht.

Wicht expects the gap to widen in 2009, when 11.1 gigawatts worth of panels could be produced while only 4.2 gigawatts will likely be installed. The average selling price for panels could drop to $3.10 per watt next year from $4.20 per watt in 2008.

Needless to say, companies with the manufacturing might to keep the costs low will do better.

Solar companies and analysts have been predicting an oversupply of polysilicon in 2009. Polysilicon is the main ingredient to produce most of the solar panels on the market today.

With cheaper polysilicon on the horizon and a growing number of new players entering the solar market, solar panel makers such as SunPower and Suntech also are expecting the panel prices to drop between 20 percent and 30 percent next year.