Solar power - California bust, Taiwan robust

A tale of two regions and their solar power outlook.

In California, applications for residential solar installations are sinking. During January and February this year, applications had dropped about 40% from the levels of the last 5 months of 2008.

California is the world's third-largest market for solar installations, behind Spain and Germany.

Because of the weak demand, solar cell manufacturers and installers in the state are cutting costs and laying workers off. Things look bleak for the near future, too. Industry observers don't see the market rebounding until at least 2011.

The demand just isn't there, according to Timothy Arcuri, an analyst at Citigroup. An overabundance of supply has kept "pricing under significant pressure," he says.

That's analyst-speak for "solar panel prices will remain low." Which will put a lid on profits.

Meanwhile, In Taiwan, four solar cell makers are planning to expand capacity by an average of 44% to 67% in 2009. One of them, Solartech Energy, intends to double or triple its capacity. And a 5th Taiwanese company does not plan to increase capacity, but will look to grow market share.

I don't believe this points to any fundamental strength or weakness in either region. It's just interesting to read about the fortunes of one market in the context of the other's. Options >>