"Prices are dropping so rapidly, it's hard to keep track of," says Fleming. "We buy as few as we can at a time right now because prices keep going down. I get daily emails from no-name Chinese panel manufacturers offering me $1.50 a watt - they all expect to double capacity over the next 6 months, as do all the big players - First Solar (Nasdaq: FSLR), Sunpower (Nasdaq: SPWRA) and Suntech (NYSE: STP). The market glut will only get worse (or better depending on your vantage point!).
Just last year, solar panels for a typical 5 kilowatt (kW) system cost $4 a watt - about half the total cost of a $40,000 system at $8 a watt. Currently, panels cost $2 a watt and are expected to drop to $1-$1.20 a watt over the next year or two.
That means a 5 kW systems now costs a customer $30-32,000; next year it will cost $20-23,000 - before rebates. With state and federal rebates, the systems would end up costing $10-12,000. "That's what gets us really excited - solar is becoming a middle class product," says Fleming.
The U.S. is forecast to become the world's largest solar market and solar manufacturers are preparing to meet demand. They're becoming more sophisticated and efficient and are looking to make up for lower prices with increased volume. "The earthquake has happened, now we're waiting for the tsunami, we know it's coming," remarks Fleming.
For now, there are only a few, tiny publicly traded solar integrators, which aren't profitable yet. "Wall Street analysts don't know what to make of the integrator, but we think we'll be profitable by the first quarter of 2010," says Fleming. Although 90% of Acro's business is residential, they're moving into small commercial systems now that California Governor Schwarzenegger signed a feed-in law that applies to commercial systems under 3 megawatts.
Acro plans to list on Nasdaq in early 2010 after it makes its fourth acquisition. It costs about $250,000 more to be on the Nasdaq so they need to do it in conjunction with a fair sized capital raise as well as an acquisition.
Where does Harry see the residential installation market five or ten years out? Mom and pops will hold 10% of the market; there will be regional leaders and three to four national players, he says. Solar manufacturers will invest in or acquire the integrators to protect the channel flows for their products. First Solar invested in Solar City and Acro has already received offers.
++++
This article also appeared in Progressive Investor, SustainableBusiness.com's green investment newsletter.
Rona Fried, Ph.D. is CEO of SustainableBusiness.com and editor of Progressive Investor.
