Is solar energy in trouble?

The sun is reflected in a solar panel outside the EQ-SYS factory that makes rotating frames for solar panels, in Feldheim, Brandenburg, June 20, 2011. It looks like Germany is backing off its solar power initiative for now, after breaking its subsidy bank.

Adriene Hill: Solar stocks have hit a bit of a dreary patch. Think double-digit stock price drops; analyst downgrades. The world's biggest solar market, Germany, is backing off a little. And there are other clouds on the horizon.

From the Marketplace Sustainability desk, Scott Tong reports.


Scott Tong: It sounds weird, but solar actually did too well in Germany. As a new energy source, it got generous subsidies. But the environment minister says the plan got too popular, and broke the subsidy bank.

Martin Simonek works at Bloomberg New Energy Finance.

Martin Simonek: It's very obvious, especially in the south of Germany. Bavaria is possibly almost all covered by now, with modules.

So they're taking away the solar punch bowl -- subsidies will phase out quickly, and sales will slow.

Strike two for the $82 billion industry is the U.S. market. American firms have sued Chinese competitors over unfair pricing.

Jesse Pichel at investment bank Jefferies expects that'll lead to tariffs and higher prices all around.

Jesse Pichel: Higher-priced solar panels means at least some projects in the U.S. will not get done.

It doesn't help that a key competitor -- natural gas -- is at its lowest price in a decade. But down the road, Pichel sees a vast solar market globally.

Long range forecast: partly sunny.

In Washington, I'm Scott Tong for Marketplace.

About the author

Scott Tong is a correspondent for Marketplace’s sustainability desk, with a focus on energy, environment, resources, climate, supply chain and the global economy.

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