Solar Supply/Demand Balance Troubling
http://www.morningstar.ca/globalhome/industry/news.asp?articleid=295861
The demand for solar power has been hurt significantly by tighter
lending to project investors and the introduction of a 500-megawatt
cap on the solar subsidy program in Spain (last year's largest solar
market) that will shrink that country's market by roughly 80% this
year. We expect global solar growth to decrease in 2009 for the first
time this decade, as there simply is no market that can replace the
estimated 2-gigawatt reduction (33% of 2008's 6 gigawatts of
installations) in demand from Spain.

The industry downturn has aggravated another serious issue that was
clearly emerging last year: Solar has far too much supply. During the
solar boom of the past few years, demand greatly outstripped supply,
and essentially every solar panel produced was sold. Solar companies
could increase sales as quickly as they could expand production, all
the while at very profitable levels. Unsurprisingly, new entrants
flooded in and existing companies expanded rapidly, with the whole
industry planning as if high-double-digit growth was set to continue
indefinitely. Given the fall in demand from Spain and the difficulties
investors are having in attaining financing for solar projects, this
is far from the case, and for the first time in years, supply exceeds
demand in solar.