Serious questions are arising around the future outlook for the solar industry in light of recent bankruptcies, falling stock prices and high debt loads burdening the industry, the Wall Street Journal says.
Seven solar panel manufacturers have filed for bankruptcy in the past few months and 6 of the 10 largest publicly traded solar companies by market cap saw a loss in Q3. In addition, in 2011, stocks of public manufacturers of solar panels have dropped by 57% year-to-date through December 19, according to The Journal.
The key issue facing the industry is oversupply, which has caused aggressive price cutting by firms who supply solar panels and their components. The biggest cause of this oversupply is the decision by the Chinese government to direct their banks to freely lend to new manufacturers, which have offered $43 billion in credit facilities to Chinese renewable energy companies since 2009. Other key factors include the U.S. government efforts to spur clean tech, VCs who have poured money into the sector, strong institutional investor demand for solar IPOs and rich subsidies from European governments for solar installations, according to the Journal.
Over the past year, prices of solar panels have plummeted from $1.40 per watt to 90 cents – or $1.05 per watt, according to Jefferies Group, which also predicts flat growth for solar installations in 2012 after growing by 8% in 2011.
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