The global solar panel oversupply plaguing the solar industry over the past year may be set to ease, thanks to “surprisingly high” demand from Germany, according to a report issued last week by industry research firm iSuppli Corporation. As a result of the Spanish solar bubble bursting in 2009, demand for solar panels fell, inventory piled up and prices tumbled precipitously. And even though iSuppli asserts that the global solar panel market “remains in an acute state of oversupply,” the worst of the glut may be over.

From the press release:

“Solar-panel installations in Germany began surging to record levels in July as prices for photovoltaic systems plunged,” said Henning Wicht, senior director of photovoltaics research for iSuppli. “This phenomenon has boosted the global solar panel business and mitigated the severe oversupply situation that has stung the industry throughout this year.”

iSuppli has accordingly adjusted its German market forecast: it posits that Germany will install 2.5 gigawatts’ worth of solar panels in 2009, up from its earlier prediction of 1.53 GW. The same report also predicts that global solar panel supply will exceed demand by 65.9 percent this year, as opposed to iSuppli’s forecast of a 91.9 percent overage, again thanks to the rise in German solar sales. Nevertheless, iSuppli maintains a tempered view of the solar industry’s near future.

The real impact of the German rebound will come in the year 2010 and beyond. Based on the massive oversupply situation in early 2009, it appeared that the panel glut would persist through the year 2010. However, with Germany exhibiting strong demand elasticity in the face of price reductions, the glut could be resolved as soon as next year, depending on how the industry reacts.

Still, this news is better than bad news, and while the thorn in the industry’s side is likely to stay for a while, perhaps recovery will arrive sooner than we think.