By Jennifer Kho

You’d hardly think spam would cause happiness. But when Rob Erlichman, CEO of Sunlight Electric, got an email advertising solar modules in October, he was so excited that he passed it around to his friends.

It wasn’t cleverness in the email itself, which bragged that Carmanah Technologies’ California warehouse was “loaded with inventory” and had “Solar Modules in Stock!”

The reason for the buzz was that Mr. Erlichman, like most solar retailers, hadn’t received any such advertisements in more than a year. “I was like, ‘Woah, that’s something different,’” he said.

Amid a worldwide shortage of silicon that has constrained the supply of solar modules, manufacturers have had to turn customers away (see Solar’s Silicon Shakeup). Now, there are signs that the shortage that defined the market since late 2005 could be changing.

Mr. Erlichman said Tuesday he’s received half a dozen emails from wholesalers, such as Marin Solar and SunWize, advertising solar modules in the last few months.

“It seems reasonable to assume the [solar-electric] shortage is over, at least for now,” he wrote in an email forwarding the SunWise ad offering “new lower pricing.”

Industry analysts have predicted the shortage would end between 2008 and 2010, with plenty of variation. Could the spams mean the shortage is over early?

Mr. Erlichman isn’t the only one to notice an ease in supply. Kate Rowland, a contract administrator for Sun Light and Power, an installer in Berkeley, California, said she thinks the shortage is abating.

After the company had trouble getting modules in 2005, “that’s not been the problem in ’06,” she said. “Getting the preferred type we want is sometimes a negotiation—getting really high-quality modules are sometimes a problem—but there are modules out there.”

But it might be too early to call the end of the shortage. Michael Rogol, managing director for Photon Consulting, said growth rates usually seem to dip in January.

“Installations in January definitely feel slower than in December,” he said. “It feels like the market is a little bit soft, and it feels like more modules are available, especially in North America—a very big market in the sector.”

But while production volume is growing very quickly—he expects to see 50 to 60 percent production growth this year—demand is growing faster, he said.

“I still think absolutely that growth in supply is nowhere near what demand is,” he said. “There is a breath the market is taking, but it’s unlikely that supply is getting closer to demand. Instead, it seems that the solar sector does this every January. When the weather gets cold, the market is seasonably cooling off.”

Mr. Erlichman disagrees with the explanation of a seasonal dip.

“Last year, we did not see solicitations and price declines, and that alone would suggest [a seasonal dip] isn’t the culprit,” he said.

Aside from solicitations from wholesalers, Mr. Erlichman said he’s seeing price reductions from manufacturers after seven or eight straight quarters of increases. For example, Sanyo—one of Sunlight Electric’s major suppliers—has reduced prices 2 percent in January, he said, and BP also has lowered prices.

“The fact that prices are coming down, plus the face that people have got product and are sitting on it, says to me the supply environment is easing,” he said. “There’s definitely more supply than there was. If supply and demand were in perfect balance, we wouldn’t be looking at lower prices.”

Mr. Rogol said that while prices are decreasing 1 or 2 percent for some suppliers, they are up 1 or 2 percent for others.

“There is not a clear pattern,” he said. “What would disprove [the seasonal-dip theory] is if we were seeing noticeable price decreases and notably more volume, but what I’m seeing is that prices are basically flat—down in some markets, up in others.”

In the meantime, manufacturers still are signing long-term supply agreements with silicon producers (see Solar’s Silicon Shakeup, Solar: Doing the Dirty, Solar Consolidation Trend Kicks Off, Three Huge Solar Trends).

For example, Elkem Solar, a Norwegian silicon supplier, on Monday said it signed a long-term supply contract with German solar manufacturer Q-Cells, for 2,400 tons of solar-grade silicon annually from 2012 to 2018.

The practice, to insure a silicon supply during the shortage, might not make sense if it were a time of ample supply, because spot prices might be more competitive.

But Mr. Erlichman said the trend is consistent with the idea that a supply shortage.

Because there wasn’t enough raw material to go around and silicon prices went up, manufacturers are just taking the first opportunity to fix the situation and are jumping on the new supply, he said.

“Increased capacity is going to get sucked up because demand is growing,” he said. “PV manufacturers are saying ‘I want to jump on my fair share immediately so I’m not left out in the cold.’”