German Solar PV Installations Set Record in 2011 (FSLR, SPWR, STP)

When Germany lowered its subsidy to solar electricity providers, the industry expected to see reduced demand for solar PV panels. What the industry did not expect is that the supply would explode and force panel pricing down by more than 40%. This could help solar makers like First Solar Inc. (NASDAQ: FSLR), SunPower Corp. (NASDAQ: SPWR), and Suntech Power Holdings Co. Ltd. (NYSE: STP).

In Germany, an estimated 7,500 megawatts of solar PV generation was installed in 2011 according to the country’s grid regulator. In December alone, about 3,000 megawatts were added. The installation increases are expected to trigger another subsidy cut in July of around 15%.

Essentially what’s happening is that prices for solar installations are falling faster than government subsidies, making it profitable to continue building solar PV generation.