Solar panel glut expected in 2009: Suntech

POZNAN, Poland (Reuters) - The solar power sector will produce an over supply of solar panels in 2009, said Zhengrong Shi, chief executive of the world's biggest module manufacturer Suntech.

"We expect definitely an over supply of modules next year," he told Reuters in an interview, adding Suntech expected its euro-denominated prices to fall by 10-15 percent next year, by 25-30 percent in dollars, compared to the third quarter of 2008.

"The financial crisis has accelerated that situation," Shi said. The entire sector could halve the cost of solar power before 2012, he added, assuming companies cooperated on cutting prices across the supply chain.

Low-carbon solar photovolataic (PV) power is much more expensive than fossil fuel alternatives and provides a tiny fraction of the world's electricity. The sector is under pressure to cut costs to prove it can scale up.

"Definitely it's do-able," Shi said, referring to a goal of cutting the cost of solar-powered electricity before 2012 to about 16 euro cents per kilowatt hour, compared to a guaranteed solar power price in much of Europe now of about 30 cents.

"We can't do it on our own. The whole industry has to contribute, can achieve it. Otherwise the market will be limited, governments will get impatient."

Suntech makes solar panels from highly purified silicon. A generally less efficient but cheaper solar PV alternative is called thin film, made from dyes and other materials, and that sector is cutting prices, too.

"We haven't cut prices of our solar panels as they are already priced below the market but others have been lowering their prices visibly over the last months," said Mike Ahearn, chief executive of First Solar, a thin-film manufacturer.

Solar power stocks have been battered in recent months on concerns that tight credit markets could hurt financing of large projects. Suntech shares have been down by about half in the past calendar month and First Solar about a fifth.

(Reporting by Gerard Wynn and Gabriela Baczynska; editing by James Jukwey)