The laws of supply and demand are actively at work in the solar industry with two direct effects: the death of some solar panel providers and a boost in the number of solar panels installed in the U.S.
Research company Solarbuzz today reported that rapidly falling solar panel prices this year contributed to a sharp increase in planned non-residential solar projects. Two months ago, the pipeline of projects was 17 gigawatts' worth of solar capacity; it now stands at 24 gigawatts.
Commercial-scale solar projects can be solar arrays at businesses or other organizations, such as utilities. Much of the demand for utility-scale solar is in California which requires utilities to get 33 percent of their power from renewable sources.
"Utility expectations for improved installed pricing measured either in per watt peak or kilowatt hour have vastly increased over the past quarter," Solarbuzz President Craig Stevens said in a statement today. "The result is more RFPs (requests for proposals) and an acceleration of PV (photovoltaic) orders."
Analysts estimate that the price of solar panels, called "modules" in the industry, have fallen about 25 percent since the beginning of the year, with more price drops expected this year.
The rapid price contraction this year and last year has put the squeeze on solar panel producers who can't keep pace. Three U.S.-based solar companies--Evergreen Solar, SpectraWatt, and Solyndra--have declared bankruptcy in the past two months, blaming global market conditions.
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The falling price of solar hardware has made buying more attractive, though, for consumers, businesses, and utilities. Solarbuzz said the three top panel suppliers for the existing pipeline of non-residential projects are SunPower, Suntech Power, and First Solar with Yingli, Sharp, and SolarWorld increasing their presence in the non-residential area.
Solar photovoltaic panel prices have affected utility project developers' choice of solar technology as well. Solar Millennium decided to scrap plans for a concentrating solar thermal system, which uses heat to generate electricity with a steam turbine, in favor of PV panels for the Blythe Solar Power Project in California.
Another factor pushing project developers to act is an expected change in the federal subsidy for renewable energy. Unless the program is extended, project developers next year will need to raise tax equity financing to take advantage of a tax credit for solar projects instead of the cash grant received now.