Solar Module Price Could Drop 20% in 2011

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"Suppliers are cutting prices in reaction to pullbacks in subsidies and increased production capacity."

Solar module prices could fall as much as 20% this year due to an excess of supply in the market, the chief executive of solar project developer Recurrent Energy said on Wednesday.

Solar modules currently sell for between $1.40 and $1.50 each, Recurrent CEO Arno Harris said in an interview, and should come down to a range of $1.20 to $1.30.

"As the industry reacts to the shifts in Europe, we're going to see those kinds of changes become transparent to the market pretty soon," Harris said.

Suppliers are cutting prices in reaction to pullbacks in generous solar subsidies in Italy, combined with the expansion of solar panel manufacturing capacity.

"The way we look at the situation right now, we are in an oversupply dynamic," Harris said, adding that, as prices come down, the U.S. solar market could absorb some of the excess supply.

One Wall Street analyst disputed Harris' figures, saying prices would likely hit the $1.50 range later this year, dropping to $1.20 sometime next year.

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