There's hope the sun may shine on the solar panel industry again soon enough. The decline in solar panel prices has been dramatic over the past year, as China's government-subsidized solar panel manufacturing companies have ramped up production and flooded the market with cheap photovoltaic cells. In a Reuters article, alternative-energy research company New Energy Finance said it expects panel pricing to fall further still in 2009 and into 2010. This jibes with the panel-pricing slide I reported in September.

But there are some early indications that the price decline may be slowing, as the glutted solar panel market's supply and demand imbalance begins to right itself. I spoke with several solar panel installers in California who said panel maker SunPower (SPWR) has begun to notify its customers that it is running short of inventory. The company did not immediately respond to requests seeking comment. SunPower is considered to be among the most technologically advanced of the solar panel makers and it tends to command a premium price for its panels, which boast a higher efficiency rating than many of the cheaper photovoltaic products.
There have been some other indications that solar panel prices may not continue to fall. According to Earth2Tech, influential solar-panel forecaster Michael Rogol reported in March that spot prices of polysilicon (a key material used in making solar panels) was more than double the long-term contract prices. This would seem to indicate that panel pricing should at a minimum stop falling as quickly.

Solar panel stocks have run up significantly based on expectations that the prices of polysilicon would continue to fall and that increased buying of solar in the U.S. as well as rising demand for panels in China would goose the industry. In general, timing the pendulum swings of these types of commodity-based industries is nearly impossible. Even the best forecasters can miss the turning point.

Unless more reports of panel shortages start to appear, it's important to take these indications with a grain of salt. But it certainly is at odds with the consensus that solar panel production is so high it will drive prices on photovoltaics down by another 50 percent or more in the coming year.

Alex Salkever is Senior Writer at AOL Daily Finance covering technology and greentech. Follow him on twitter @alexsalkever, read his articles, or email him at alex@dailyfinance.com.

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