The solar energy industry has grown dramatically over the last few years, and along with it, the demand and production of essential parts and pieces has increased. Production of photovoltaic panels has recently outstripped demand, and a major solar panel oversupply has stockpiled for 2011.
With a large share of previous panel sales having been tied up in the European market, the wane in European solar incentives (most notably Germany, which until recently accounted for almost half the photovoltaic panel market) contributed substantially to the initial photovoltaic panel overflow. Axiom Capital Management Inc. analysts estimate that the supply of photovoltaic panels may exceed demand by a factor of nearly three to one this year with solar panel prices potentially dropping as low as $1.10 per watt, down from $1.80 in 2010.
Despite this, the production capacity of photovoltaic panels is expected to increase, with panel production companies such as Southern California Edison signing power purchase agreements for upwards of 900 megawatts worth of solar PV. This may lead to an additional surplus of PV panels. Combined with the existing solar panel oversupply, solar panel manufacturers will likely look to discount the cost of photovoltaic panels in a bid to unload older inventory.
This surplus and discounting of solar panels has created an opportune time for individuals and businesses to purchase solar energy systems. Government subsidies for the installation of new solar systems were scheduled to end in 2010, but last year Congress voted to extend the Investment Tax Credit and the 1603 grant (part of The American Recovery and Reinvestment Act of 2009)
With low solar panel pricing and government funding assistance, now is the ideal time to take advantage of the solar industry's buyer-friendly market and invest in solar.
The Investment Tax Credit, 1603 Grant and Modified Accelerated Cost Recovery System programs offer large incentives for individuals and businesses to invest in photovoltaic systems.
Individuals and businesses can apply for a tax credit equal to 30% of the cost of buying and installing a solar energy system. For more on how the Investment Tax Credit can benefit your future home or business solar installations, click here.
Businesses can further benefit from the U.S. Treasury Department 1603 Grant, which allows them to receive money from the Investment Tax Credit directly in the form of a grant. For more information on the 1603 Grant and how it can help offset your solar installation costs, click here.
Special bonus depreciation (also known as the Modified Accelerated Cost Recovery System or MACRS) is available in 2011 which allows qualifying businesses to write off 100% of the entire cost of their solar system, rather than over a period of years. For more information on special bonus depreciation, click here.
- Businesses, in particular, can benefit from the solar panel oversupply.
- The solar panel oversupply could reduce the cost of photovoltaic panels to as low as $1.10 per watt.
- The 2011 expiration dates for the MACRS & the 1603 Grant are a strong reason to buy now and not miss out.