Solar power may become more affordable, due to economic downturn

From, on Tuesday, November 4, 2008:

“In our view, too much solar capacity has been added relative to demand, and will lead to oversupply,” Goldman Sachs analysts wrote, adding that the consequences would drive module prices down by about 15 percent next year.

Oversupply and an easing of demand as economies slow will help the cost of photovoltaic solar energy fall in line with the cost of conventional electricity — so-called “grid parity” — which will ultimately give the sector a boost, but not before many companies have fallen by the wayside.

A toxic mix of tight credit and falling prices will make it especially perilous for those solar companies with weak cash flows and high debt.

“On a global average, three out of four (solar energy) companies will not make it,” said Robert Schramm, analyst at Germany’s Commerzbank.

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