Solar Energy Predictions for 2011

2009 and 2010 were great years for the solar energy industry. This is rather odd when you think about it. Why? Well, nearly everything else was a complete disaster. So, will the good times continue in 2011 or will the solar energy industry start to reflect what is happening in the real economy? Let’s get to our predictions for 2011.

2011 is going to be a bumpy year for solar energy. There is no other way to view it and manufacturers are already more than a bit nervous. Is solar going out of favor with consumer? Are we going back to oil and coal? Has President Obama turned his back on alternative energy? I don’t know the answers to these questions, but I do know they are not at the heart of the problems for solar in 2011.

The problem is simple – oversupply. Solar energy has had so much momentum the last few years that every Tom, Dick and Harry has moved into the field. We now are looking at a supply rate that is forecast to be twice the demand level in 2011. This is a classic formula for price drops and the contraction of the industry.

As if things weren’t going to be rough enough, additional developments are pointing to an even slacker demand. Much of the solar panel sales explosion has occurred because state and federal government provides financial incentives to help people deal with the initial cost of panel systems. The economic collapse has slashed tax revenues, so governments are now slashing these incentives. That will weaken demand even further, a real shock to the system.

What about consumers? Solar will be a mixed bag in 2011 for us as well. There will not be nearly as many incentives to help us with purchases. That being said, the good news is a glut of panel systems should lead to some incredibly low prices on home systems. This will be particularly true as manufacturers fail, merge and try to get rid of inventory.

The solar energy industry got off lightly through the years of the Great Recession. That is about to change in 2011.