In the past few years, solar cell and solar panel manufacturers worldwide added a large amount of production capacity in anticipation of an expansion of demand that did not occur on the same scale as expected.

Part of the problem the manufacturers are facing has been a reduction in subsidies for renewable energy by European governments as Europe has imposed austerity measures to reduce government deficits in the wake of the global recession of 2008-2009.

In 2011, Germany and Italy accounted for more than half of the world’s demand for solar power, a demand boosted by generous government subsidies that are now being reduced or discontinued. These cuts along have delivered a severe blow to the solar panel market.

Another part of the problem is the great expansion of solar cell production particularly by Chinese companies, although non-Chinese companies such as market leader First Solar, Inc. of Tempe, Arizona, have expanded their production capacity as well.

Between the contraction of expected demand and the increase in production, the market currently has a glut of solar cells, which is reducing profitability of solar power manufacturing but potentially means bargains for the consumer who wishes to buy solar cells or solar panels for a home system.

Solar Cells Surplus = Falling Prices

As manufacturers seek to reduce excess inventories caused by overproduction, the cost per watt of solar panels and of solar cells you can use to make your own solar panels is dropping for the careful shopper.

The main difference for those who are in the market for seconds and blemished (but still perfectly functional) solar cells or surplus cells at a reduced price to use to make solar panels at home, given the realities of today’s solar-cell market, is not only a drop in price but also an increase in availability.

In the past, surplus solar cells have been available in limited supply as manufacturers expanded production to meet an expected demand increase that did not materialize on the same scale as they anticipated.

Today, and for a limited time most likely, solar cells can sometimes be found in quantity for 40 to 50 cents per watt (which is actually less than the cost of production). This is a situation that is unlikely to last, but which will benefit consumers as long as it is ongoing.

Factors Likely To Reduce Solar Cells Surplus

European governments are unlikely to increase subsidies for solar power very soon as the management of the Euro seems committed to an austerity strategy to maintain the value of the currency.

It is also unlikely that the U.S. federal government will be making up the difference, barring a major upset and return of Congress to Democratic control in this year’s election.

Individual U.S. state governments may provide some assistance to solar power development in order to meet renewable energy targets, which are especially stringent for the large states of California and Texas, but state governments are also facing tight budgets and may be in no position to do much.

China has committed itself to encouraging domestic demand for solar power, however, and this may make a difference if it is handled well. Meanwhile, solar cell manufacturers are cutting back production in response to losses on the market, which will bring production into line with demand and reduce the surplus.

What this means for the consumer is that the current glut on the market is unlikely to last. That is, of course, always true of a surplus caused by overproduction or demand that falls below expectations. If you are interested in finding cheap solar panels for your home, the best recommendation is to look for them now, as conditions will be worse from the consumer’s standpoint probably in less than a year.