2014 Is Expected To Be The Solar Market's Tightest Supply Year In Nearly Half A Decade

Rob Wile, data via GTM ResearchThe solar panel glut appears to be ebbing.

For the past five years or so, the world has found itself awash in solar panels. Thanks to an initial spurt of European incentives for renewable energy and subsequent production boom out out of China, prices for solar module units went into a multi-year decline.

But the global solar boom has finally brought down supplies, and 2014 looks to be the tightest supply year in nearly half a decade, according to GTM Research.

"The global PV supply chain has rebounded strongly from the overcapacity-induced lows of 2011 to 2013, with robust demand growth from markets such as China, Japan and the U.S. coming into contact with a fitter, leaner supply chain," GTM's Jade Jones and Shyam Mehta write. "With 2014 expected to be the PV market's tightest supply year in nearly half a decade, supply constraints and rising input costs are expected to result in meaningful increases in pricing across the PV value chain."

Prices for solar modules - the industry term for panels - actually started going up around this time last year. That was their first price increase in three years. Global module prices are actually back down this year, with the exception of those in the U.S.

However, prices for Polysilicon and wafers, which are used to make the solar cells in the panels, went up in the first half of 2014.

"In general, I would say that this is the healthiest shape that the solar supply chain has been in since 2010," Mehta said in an email to Business Insider.