The price of a critical ingredient for many solar panels, polysilicon, has dropped as more producers have entered the market.
"A ton of production, mostly Chinese, has come online," Chris Whitman, president of U.S. Solar Finance told The New York Times.
In addition, demand has fallen, especially in Europe, due to the recession.
Spain, where unemployment has soared, sharply reduced its subsidy for solar panel installations, due to budget restraints.
U.S. states are also cutting rebate offers for solar installations, the Times aid.
Falling prices are a mixed blessing for U.S. panel producers, persuading some to put solar panels on their roofs, but lowering company profits.
Still, "it's important that these costs and prices do come down," said Mike Ahearn, chief executive officer of First Solar, a panel production company in Tempe, Ariz.
The consultant firm SunCentric said the reduced prices could help shrink the average time for solar panels to reach the point of paying for themselves from 22 years to 16 years in locations that have high electric costs.
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