Agitated by plummeting prices and falling market shares, European solar companies may soon be forced to accelerate their moving production to Asia, according to analysts. Long heralded as the solar industry’s role model and original success story, Europe has as of late started seeing its solar sector fall victim to an oversupply of cells and modules, which results in lower prices for solar systems. Add to this diminished government incentives and the stiff competition posed by Asian solar companies, which can offer prices that are on average 30 percent lower (in the case of the Chinese), and it is little surprise that European solar cell manufacturers have lost so much market share.

While the savvy consumer is poised to benefit from this, those working in the European solar sector are likely to have a rough year ahead for them. Manufacturers such as Q-Cells and Ersol have had to slash their 2009 forecasts while shifting their gaze east. The Reuters article linked to above rounds up the following observations:

Already, 2009 is looking like a lost year for the European solar sector. Though Germany is still expected to become the world’s biggest market by installation, according to industry association EPIA, weakening demand and tough credit conditions are dashing hopes for a quick industry recovery.

Europe’s solar companies haven’t ceded their ground yet, though. They plan to get back on top by playing their competitor’s game—slashing prices—and to do so they have had to set up plants abroad, where production costs are lower. But how do you compete with China, which recently announced a subsidy of 50 percent for investments on large solar power projects and which accounted for roughly one third—a number sure to grow—of the market for global solar cell production in 2008? The “you get what you pay for” argument doesn’t seem to be as effective as it used to be, in the face of the tough economic climate and given that Chinese manufacturers have been aggressively pouring capital into development and expansion. But do you think these German solar companies will be able to catch up?

Either way, one thing seems clear, though—the price of solar power can only go down.