Pressure keeps mounting for the solar industry. On one side, falling subsidies in Europe have driven panel prices lower all year, and on the other side costs are becoming harder to cut after the easy trims had been made.
For years, rapidly falling silicon prices drove manufacturing costs down. Solar power went from a dream to a renewable energy reality as low-cost labor in China put together less expensive materials into panels. But now that costs have stalled out and even risen for some companies, the question becomes why and how do we fix it?
Silver has become a big drag on cost as the shiny metal climbs in price. Companies like DuPont
Solar panel makers use 11% of the world's supply of silver, and as production capacity grows so will demand. That means the $0.11 or so of silver in each panel may continue to rise. Trina Solar
DuPont for one is working on alternatives to current silver use, but a transition may take awhile. Silver is such a big part of solar manufacturing that this problem won't be solved overnight. In the mean time, First Solar
Foolish bottom line
As earnings season approaches, keep an eye on cost-per-watt trends and margins at solar manufacturers. Right now they're being hit from all sides, but the strong companies that survive should be big winners in the long run. It's just a question of how much pain they'll feel in the mean time.
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