Solar cells eclipsed by credit crunch

The credit crunch has put an end to the glory days of photo voltaic panels as the bottom drops out of the entire semiconductor market and governments have slashed subsidies on their citizens installing units on their houses.

According to the Wall Street Journal, Spain has taken the unprecedented and non-green step of cutting subsidies to the industry and that means there’s far less demand for polysilicon.  Estimates are that sales will fall by a fifth during this year.

This is good news and bad news. Solar panels are overpriced and there was such demand for them before the credit crunch, er crunched, that the prices continued to shoot up.

The laws of demand and supply apply as equally to the price of solar cells as to the price of roast beef. The gravy train appears to have collided with the buffers.

The good news is that the credit crunch may well benefit the growth of the solar panel market because prices will be more affordable. The UK cut subsidies to home owners a year or two back, meaning that if you wanted to put panels on your south facing roof, it would cost you an arm and a leg.

Yet the economics of having solar panels on your roof are very sound. For example, Britain is criss-crossed by canals – part of the industrial revolution to move freight around using raw horse power.

Today, the house boats have engines, but electricity isn’t laid on. Even one solar panel, facing the right direction, can drive your lights in winter and your fridge in high summer, according to one boater near Oxford we chatted to over the weekend.

Spain, according to the WSJ, here (subscription required),  has slashed subsidies to 500 megawatts in 2009 while last year it supported 2,400 megawatts.