solar energy good or bad

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In 1985, worldwide annual solar demand was only 21 megawatts. By 2007, it had reached 2,826 megawatts. Solar energy has grown about 30 percent per year over the past 30 years, reaching a peak in the United States in 2007 with a 57-percent growth rate.

During those boom years, from 2000 to 2007, U.S. solar manufacturers from silicon producers to panel makers enjoyed a completely different sort of “green” revolution. Even startups found it relatively easy to make money. Now, with a global recession in full swing, the law of supply and demand is catching some manufacturers with an excess of stock that spells financial trouble.

Granted, installations are projected to rise almost 10 percent. However, revenues – hinged to excess stocks and a decline in project demand – are expected to decline to $12.9 billion in 2009, which is 19 percent lower than 2008.

The solar industry hasn’t seen this kind of recession in the last 10 years. In fact, it hasn’t seen this magnitude of decline in its entire history.

“In 2009, average prices for panels for new installation contracts will collapse to the $2.50 to $2.75 per watt range by the end of 2009, down from the current level of $4.20 per watt. The average price for the year will be $3.10 per watt.” Notes Dr. Henning Wicht, senior director and principal photovoltaics analyst for iSuppli Corporation, which provides databases, tools and market analysis reporting to the electronics industry.

Compounding the problem of vast stocks of panels, solar manufacturers are facing a tightening of the money supply, as banks become increasingly reluctant to fork over cash. The solar firms most likely to survive the crunch, according to Wicht, are those which are fully integrated; that is, those who supply their own materials and components.

The situation is worst in China, where solar giant SunTech Power recently laid off 10 percent of its workforce to manage the crunch without folding. The glut on the worldwide market will cause solar panel prices to drop by at least 20 percent this year, ending an eight-year pattern of phenomenal growth.

This is bad news for manufacturers, who are facing a projected negative supply/demand ratio of 168 percent this year. It is, however, very good news for homeowners who have put off installation of solar panels because of high prices. Acting now, homeowners can take advantage not only of lower solar panel prices, but the Clean Energy Tax Stimulus Act of 2008 (amended as part of the recent bailout bill, passed Oct. 1, 2008), which provides up to a 30-percent credit for renewable energy installations.

This act, which repeals the previous cap of $2,000 for each system, is applicable to taxes for a full 10 years, beginning on the date the system is put into service. However, in order to qualify, the system must “go live” before December 31, 2009.

The timing couldn’t be better for homeowners considering solar energy, since iSuppli predicts the economy, and solar panel production, will rebound in 2010, rising to $17.8 billion, or more than 38 percent higher than 2009.

If ever there was a time for getting solar on the cheap, that time is now.

About the Author:

Cooler Planet is a leading solar resource for connecting consumers and commercial entities with local solar Installers. Cooler Planet’s solar energy resource page contains articles and tools such as our solar calculator to help with your solar project.

Article Source: ArticlesBase.com – Recession Making Solar More Affordable Than Ever