(BN) Solar Panel Makers Face Supply-Glut ‘Armageddon’: Chart of Day


Solar Panel Makers Face Supply-Glut 'Armageddon': Chart of Day
2010-11-16 00:00:00.3 GMT

By Ben Sills
Nov. 16 (Bloomberg) -- Solar panel makers from Arizona to
Shanghai face a price crunch in 2011 because they're adding
manufacturing capacity just as global demand is poised to fall,
Axiom Capital Management Inc. said.
The CHART OF THE DAY shows the supply of photovoltaic
panels may climb to almost triple the level of demand next year,
flooding the market and potentially crashing the price, said
Gordon Johnson, Axiom's New York-based solar power analyst.
"It could be Armageddon," he said in an interview.
"Demand is about to fall at a time when you're going to have a
significant increase in supply. In a commoditized industry, that
is a formula for disaster."
Manufacturers have sold a record number of panels this year
as developers rushed to connect them to the grid and lock in
subsidized power prices before the rates are cut by governments
in Germany, Italy and the Czech Republic. In Germany's case, the
world's largest panel market, demand will fall in 2011 after the
state cuts rates producers earn by 13 percent, Johnson said.
That will glut the market next year for photovoltaic
panels, which turn sunlight into electricity, and drive the
price manufacturers can charge down to as low as $1.10 per watt
from about $1.80 this year, Johnson said.
Revenue may be undercut for panel-makers from Tempe,
Arizona-based First Solar Inc. to JA Solar Holdings Co., the
Shanghai-based company that got a $4.4 billion credit facility
for expansion this year from a Chinese state-owned bank. JA
Solar alone added 0.5 gigawatt of factory capacity in the second
half, or 5 percent of global demand forecast for next year.

For Related News and Information:
Levelized cost of energy: LCOE <GO>
Top environment stories: GREEN <GO>
For more charts: CHART <GO>
Global energy statistics: NRG <GO>

--Editors: Todd White, Randall Hackley

To contact the reporter on this story:
Ben Sills in Madrid at +34-91-700-9603 or bsills@bloomberg.net

To contact the editor responsible for this story:
Reed Landberg at +44-20-7330-7862 or landberg@bloomberg.net