According to the Renewable Energy Corporation, one of the world’s leading manufacturers of equipment for the harnessing of solar power, the difficulties faced by the solar industry in recent months could soon be over. The Norwegian company, which experienced heavy losses in the second quarter of this year thanks to a sharp drop in prices (component prices fell as much as 45%) believes that demand is now picking up once again and that the market is due to stabilize at a much more profitable level.
The fall in prices was seen to be caused by the ever increasing amount of cheap supplies and components (including silicon, wafers and modules used in pv solar panels and pv cells) from China as well as the confusion caused by the government’s mixed signals on its renewable subsidy schemes. All of this came at a time when most countries were also facing mounting debts and unable to make significant investments in new energy schemes.
Ole Enger, the chief executive of REC noted that demand was improving significantly now and that those prices had indeed begun to stablise since Italy set out a new subsidy scheme at the end of May. That deal was important because Italy is the second largest European solar market behind Germany and it ended many months of worry over the viability of the Italian solar industry, a sector that makes up almost 20% of REC’s business. The securing of the Italian subsidy also helped to restore some confidence in the wider European solar market. Speaking to the Financial Times, Ole Enger noted that the previous uncertainty in Italy had caused paralysis in the markets and had left potential customers deciding to wait and see whether prices were going to fall further still. Those orders were now flowing in. In addition, Mr Enger noted that there was a great deal of political momentum towards renewable energy in the aftermath of the Fukushima Daiichi disaster:
“Nobody wants to benefit from what happened in Japan but the reality is that it has resulted in a shift away from nuclear power, which creates an opportunity for us,”
Japan is now considered to be a large potential market in the aftermath of that disaster and a market that could rank alongside Italy and Germany in size.
Nevertheless, the company still needs prices to rise a further 20% before full production could be resumed and in the meantime they have been forced to lay off over 500 workers temporarily, and mothball two plants in Norway. REC shares have plummeted over 50% in the last year because of the aforementioned market conditions, but they recovered by 10% on Tuesday following the announcements of cost cutting.