According to the market research company, The Information Network, the wholesale price of solar panels has dropped from $US4.05 per watt a year ago to $US1.85 today. The company predicts that the price could drop below $US1 per watt next year and be as low as $US0.50 per watt in 2011.

The main reason for the falling price is increased manufacturing capacity in China combined with decreased demand during the global financial downturn.

Not only has Chinese competition directly forced lower pices but European countries have begun scaling back their subsidies because the funds were increasingly going towards imports from China rather than supporting local manufacturers.

The Informatioin Network predicts that as many as half of the more than 200 solar manufacturers in the United States will not be able to survive if prices remain below $US2 per watt.