Solar Gets Cheaper Amid PV Panel Glut update from July 2009

Why are we seeing more data center projects incorporating solar power? One factor in the equation may be "major oversupply and price erosion" in the market for photovoltaic panels and accessories, according to market analysts iSuppli Corp. Key suppliers in the solar module and cell industry were holding 121 days of inventory in the first quarter of 2009, up from 74.2 during the same period in 2008.

“The worldwide solar industry for the first quarter added the equivalent of one-and-a-half months of excess inventory in just one year,” said Dr. Henning Wicht, principal analyst, Photovoltaics (PV) research, for iSuppli. “With new polysilicon capacity coming online this year, the PV industry will suffer further price erosion, at all nodes of the value chain.” iSuppli estimates the spot price per kilogram for polysilicon, the key raw material for making solar cells, will drop to $50 by the end of the year, down by 72 percent from $180 per kilogram at the beginning of 2009.

The economics of solar power remain difficult for data center use, but lower pricing may make solar generation a more viable option for providers keen on attracting "green" tenants.