German manufacturer Q-Cells has given an indication of how falling prices are impacting the solar cell market.
Q-Cells saw sales fall and reported an operating loss of euros 47.6m for the first six months of the year.
Significantly production volume has remained almost constant at 272.2MWp in comparison with the first half of 2008.
It has been falling prices and reduced customer volumes which have been the problem. The company is cutting costs and around 500 jobs to deal with the problem.
How can things have gone so sour so fast for the solar industry?
Firstly, the structure of the market has changed.
Then there is massive overcapacity as factories come of stream from teh frantic building programmes of the last two years.
Thirdly, the solar sector relies on large, sometimes publicly-funded projects, which have been impacted by the global economic crisis and the kerbs on bank-lending.
According to marketwatcher iSuppli, the oversupply situation is not likely to be corrected in the near-term.
Total solar panel production in 2009 will grow by 14.3% to 7.5 Gigawatts (GW), up from 6.5GW in 2008. However, only 3.9 GW worth of installations will take place this year. That means that almost one out of every two panels produced in 2009 will not be installed but stored in inventory.
There has been a progressive build-up of inventory in the supply chain, from the raw material polysilicon, to Photovoltaic (PV) cells, to complete solar systems.
The solar panel production glut will last for another three years, says iSuppli, which is worrying news for manufacturers, like Q-Cells, which are trying to adapt to a changing market structure.
The structure of the solar power market has been heavily dependent on one country, namely Spain.
Spain accounted for 50% of all worldwide solar power installations in 2008.
But a combination of the global economic crisis and changes to the way projects are funded in Spain and turned the tap off and the industry which was too dependent on one country market has been hit hard.
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