After global sales of photovoltaic (PV) equipment topped $14.2 billion in 2011 after a record 84% uptick in 2010, the industry that supplies thin-film cells and other gear for solar panels used in commercial and residential applications is experiencing a 50% or greater decline in revenues so far this year, according to NPD Solarbuzz, a leading market research firm.

The drop-off, says the firm, is due to the eagerness of PV sellers to get on the bandwagon of leveraging federal stimulus dollars and energy tax credits to builders and homeowners that spurred demand for alternative energies like solar power.

But once the stimulus dried up and the hoopla over tax credits waned (though credits for solar energy investments remain available through 2016), the PV market found itself with too many suppliers and too much inventory, leading to an “adjustment” in demand and sales.

“An artificial peak in equipment spending [in] 2010 and 2011 was out of sync with the long-term requirements of the industry,” says Finlay Colville, a senior analyst with Solarbuzz. “That growth created a misleading picture for PV equipment suppliers.”

Which doesn’t mean the industry won’t recover ... or that interest in residential solar is waning as a hedge against legacy energy supplies.

Solarbuzz predicts that the fallout of 2012’s sales dip will not only balance supply and demand quickly, but also reduce the number and strengthen the quality of suppliers by 2014 and beyond.

With that, spending is expected to resume double-digit annual growth beginning in 2013 through 2016, according to the firm’s latest “PV Equipment Quarterly Report” available by a subscription at www.solarbuzz.com, as the latest versions of the International Energy Conservation Code and national green building certification programs continue to proliferate and the federal tax credit for solar energy systems nears its deadline at the end of 2016.