German solar sector to dim in 2009 says WestLB

By Eva Kuehnen

FRANKFURT (Reuters) - Germany's solar sector is in for another year of strong growth but the industry may see a downturn in 2009 as falling silicon prices may weigh on companies' profits, a research report by WestLB said on Monday.

The sector will likely benefit this year as investments are brought forward before a revised renewable energy law comes into effect in 2009 that will see reduced government support, WestLB said in the study on the outlook for renewable energy.

"After the boom year in 2008, growth won't be as strong in 2009," WestLB's Sebastian Zank said on a conference call with journalists.

WestLB expects global installations of solar power systems to grow by 50 percent in 2008 to 3.5 gigawatts (GW) and by 30 percent in 2009 to 4.5 GWs, it said.

Germany's Solar Industry Association (BSW) expects the global solar industry to grow by 20 to 30 percent annually in the next three years, it said in a statement on Monday.

"Sector sentiment may turn in the second half of 2008 due to the overcapacity in silicon," Zank said.

A shortage of silicon, a key material for solar cells, has kept prices up in the industry.

But they are seen falling as silicon producers such as Hemlock, MEMC Electronic Materials, Norwegian solar energy firm Renewable Energy Corp (REC) and Germany's Wacker Chemie rapidly expand production capacity.