Solar Panel Prices Could Hold Despite Market

The solar outlook is getting a bit brighter.

In the recent round of earnings reports, a number of solar industry executives said solar panel demand and prices next year might hold up better than expected.

"It feels like things aren't going to be as bad as originally feared," says John Hardy, an analyst with American Technology Research.

That would be comfort to solar companies, which still are expecting slowing demand at a time when supply is increasing. But where most analysts had been expecting solar panel prices to fall 10% to 20% in 2009, some industry executives and analysts now are expecting a decline of less than 10%, and perhaps less than 5%.

The more pessimistic forecasts followed word that Spain, which has fueled much of this year's solar growth, is all but certain to sharply curtail government financial incentives, a move that would likely slash demand and reduce prices.

Other Markets Besides Spain

Observers, though, are more optimistic that other countries will step in to help fill the void.

"Even with the decline in Spain there are plenty of other countries that are waiting for solar modules -- markets that have been ... undersupplied," said Pavel Molchanov, an analyst with Raymond James.

"Fears of steep 2009 (price) declines appear overstated," Robert Stone, an analyst with Cowen and Co., recently wrote in a note to investors.

Also helping solar companies prop up profit is a forecast that prices of polysilicon, a key solar panel component, could fall next year as supplies improve. Analyst Hardy says polysilicon prices should fall around 8% to 10% under most contracts.

The solar industry is unusual in that sales depend heavily on generous financial incentives from governments around the world looking to help the green energy source compete with traditional energy sources such as coal or natural gas... read more about Solar Panel prices