Solar revenues set to fall, says new report

According to a new report the revenue from the solar industry is expected to fall sharply before it rises once more, as the decline in solar panel prices begins to outweigh corresponding volume increases.

The report published yesterday by Lux Research forecasts that the solar power industry will see revenues fall to $56.9 billion in 2012 from $64.4 billion the previous year. However, the independent research and advisory firm say that the sector will recover in 2016, with revenues soaring to $65.4 billion.

Lux highlights the fact that cuts to government incentives in countries such as Italy and Germany have caused supply of solar panels to outweigh demand. Demand though is expected to rise substantially as the price of solar panels fall.

The subsidies introduced by European governments in support of the solar power installation have seen the industry grow considerably in recent years. However, with the expected cutback on government subsidies the European market will soon make way for the emerging markets in the United States, China, Japan and India, who Lux see as the future big players in the sector.

"Demand will shift to Asia and North America and the solar market will grow in terms of megawatts installed, but revenues will stay flat as price declines outpace volume growth," the report states.

According to Lux, solar industry volumes are expected to grow by 15.5 percent a year, from 15.8 gigawatts (GW) in 2010 to 37.5 GW in 2016.