Solar News

Two European solar manufacturers cut output this week as solar panel prices continue to drop and demand stays low.

This week, Meyer Burger, Europe's biggest solar equipment maker, said it would temporarily stop production at its site in Thun, Switzerland, for a maximum of three weeks. According to Reuters, "solar panel makers have been struggling to deal with weakening demand in Europe. They're also under pressure from Chinese manufacturers such as Suntech Power Holdings Co. and LDK Solar Co., which expanded production capacity just as demand slowed, causing cell and module prices to plummet."  The drop in demand comes as no surprise given the economic downturn and cut in feed-in tariffs in Europe.

Norway's Renewable Energy Corp., known as REC, was also forced to reduce output and permanently closed three solar plants on Wednesday. Just like Meyer Burger, REC found that the fall in demand and continued rise in competition led to a "highly uncertain future" in which industry-wide polysilicon production capacity remains well above estimated global demand, according to another article in Reuters U.S.

In fact, even as feed-in tariffs in Europe are cut causing a fall in solar panel demand, China's manufacturing capacity has substantially increased. This has created an oversupply of solar panels and a consequent drop in prices. Solar manufacturers who are having trouble competing have no choice but to cut production in order to stabilize world prices. And yet, prices are predicted to continue to drop by 35% every ten years. The return on investment from solar power is also higher than that of any other renewable energy source, according to an article in Solar Industry Magazine, meaning that solar panel prices are very low. This will continue to create difficulties for some solar manufacturers, unless demand once again picks up. According to the same article, demand growth in North America, China and India in 2012 might, in fact, offset the current lull in European demand.