29 November 2011 03:56 [Source: ICIS news]
SINGAPORE (ICIS)--Trading conditions in the solar power sector will likely be tough for the next two or three years because of cuts to incentives for renewable power in some countries, Fitch Ratings said late on Monday.
The situation will improve when better technology and carbon-emission charges on other forms of electricity generation make costs more competitive, the rating agency said.
Fitch added that the cuts to incentives for the renewable energy sector are likely to be the steepest for photovoltaic solar projects.
Moreover, the impact of a supply glut from Chinese photovoltaic panel manufacturers, coupled with potentially weakening demand on the back of falling tariffs, will weigh particularly heavily on the European solar panel manufacturing sector in the short term, it said.
However, Fitch said that over the next three or four years, technology advancements in the solar power sector will help increase efficiency and reduce the price premium as compared with other energy sources.
“The [price] difference could be further eroded if a strengthening global economy led to sustained high oil and gas prices, which would feed through to higher electricity prices,” it added.
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