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Solar panel outlook clouded

Analyst predicts sales may fall for 1st time in 2012

Solar panel sales may fall for the first time in 2012, leaving manufacturers with mounting inventories and excess capacity, an industry analyst says.

"New capacity in 2012 is likely to be flat, if not lower, than this year after significant drops in subsidies in key European markets," said Martin Simonek, an analyst at the firm. "That demand during 2011 has been stronger than last year has helped many companies stay alive. Next year will be different."

Photovoltaic plant developers may install as little as 23.8 gigawatts of new panels next year as European governments cut subsidies, according to the researcher. That compares with at least 24.5 gigawatts forecast for this year, a 40 percent increase from 2010, and double-digit growth since 2007.

Low-cost manufacturers in Asia boosted production after installations more than doubled last year, leaving developers scrambling for equipment as subsidies in Germany and Italy fueled demand. As those new lines produce, European governments cut support for solar energy and work to keep a lid on electricity costs amid an economic slump.

Mr. Simonek's forecast is more optimistic than some. Goldman Sachs last month lowered its forecast for next year 10 percent to 20.8 gigawatts, compared with an estimated 19.6 gigawatts this year. Deutsche Bank AG analyst Vishal Shah expects 21 gigawatts in capacity this year and 25 gigawatts in 2012, according to a note Saturday to clients.

"If oversupply continues to force prices to drop fast next year, many companies will be priced out of the market and forced out of business," Mr. Simonek said. "And while growth in supply has been much weaker this year than during 2010, significant oversupply still is expected in 2012."

Panel installations this year may reach 29.4 gigawatts, while the upper end of its forecast for 2012 is 31.8 gigawatts, the analyst said.

The biggest U.S. solar panel maker is First Solar Inc., of Tempe, Ariz., whose only U.S. plant is in suburban Toledo.

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