The current low prices for solar could be it's greatest detriment. That’s because it could force some of the higher quality manufacturers, along with lower-quality manufacturers out of business, tarnishing the industry in the process.
That’s according to the findings of Navigant’s 7th annual Analysis of Worldwide Markets for Solar Products and Five-Year Application Forecast, released earlier this week. The statement holds true across all solar industries, photovoltaics, concentrating solar power and concentrating PV, the report found. The report also found that solar incentives are detrimental to the solar industry even as it continues to grow.
The low prices and generous incentives have meant that a new stream of manufacturers have entered the PV market to take advantage of the opportunity. But the manufacturers entering still assume they can make a profit while undercutting other manufacturers, meanwhile installers and purchasers continue to expect that the downward pricing trend will continue, according to Mints.
Still solar is expected to growth through the rest of 2012 and into 2013. “We believe solar [installations] will be up in 2012,” said Navigant’s Director of Solar Research, Paula Mints and report author. “Next year might be up too,” she said.
Companies still have excess inventory. and they might do better to sit on that inventory than to continue to compete for marketshare. “It would be better to sell less right now, because every one’s losing money. We need some time to recover. The prices have to come up before even more manufacturers go out of business,” Mints said.
Otherwise, as companies compete to keep prices below sustainable levels, lower-quality modules could be introduced to the market, which would ultimately turn consumers, utility, commercial and residential, from solar. Thus far, quality issues are a relatively new issue to solar, according to Mints. Even last year when First Solar had some quality issues, they replaced the modules. Mints acknowledges that every industry, from bulldozer manufacturers to toy-makers have experienced recalls. However, there have been few recalls from the solar industry and Mints said it compared favorably to other industries.