Many public solar companies will soon be reporting their second-quarter earnings, and they will likely have some painful stories to tell.

Gross margins of solar panel makers slid 25 percent in the first half of this year, and the average price of silicon solar panels dropped from about $1.80 per watt in the first quarter to below $1.40 per watt currently, according to an IMS Research report on Tuesday.

Manufacturers have cut their solar panel pricing by around 15 percent in the last six weeks. The prices are falling at a faster clip than the manufacturing costs, however, IMS said.

Norway-based Renewable Energy Corp (REC) on Tuesday reported a net loss of 6.7 billion kroner ($1.2 billion) for the second quarter. A year ago, it posted a net income of 757 million kroner ($137.8 million). Average selling prices of its wafers and panels fell 21 percent and 14 percent respectively. Even back in May, the company announced it would cut the production of silicon wafers, cell and panel and lay off about 500 employees, though the company said the layoffs might be temporary.

Prices began to fall quickly for manufacturers during the first quarter when key European markets, such as Italy and France, couldn’t settle on how much cuts they wanted to make to their subsidized solar electric rates, otherwise known as feed-in tariffs. Plus, manufactures were planning for some serious production expansions last year when the market was hot.

Cuts in subsidies typically force manufacturers to lower their prices. Policy uncertainties – coupled with what is traditionally a low season – caused a pileup of inventories in the first three months of the year. First Solar and SunPower both reported uninspiring sales and profit.

The market couldn’t absorb the bumper crop of solar gear quick enough in the second quarter. All hopes are pinned on the second half of this year. Volatility happens in every market, of course, and solar’s is particularly affected by government policies because it’s ultimately trying to replace power from coal and natural gas. To do that, solar electricity will have to be cheaper, and at this point, it can’t get cheaper without government incentives. But many solar incentives, whether they are in Europe or the United States, are subject to political whims and frequent revisions.

Solar companies have always known that they can’t rely on Europe forever as their best market. The issues are when to start seeking new markets in earnest and how many resources to put into that effort. First Solar executives have talked quite a bit about exploring new markets in the last nine months. India, in particular, is getting a lot of attention. Companies from giants such as First Solar and Suntech Power to startups such as Abound Solar have signed some sort of agreement to sell their panels to Indian customers.  

On Monday, the Export-Import Bank of the United States announced it would provide a $9.2 million loan to Punj Lloyd Solar Power in India to build a 5-MW project using Abound’s solar panels. On the same day, the bank also said it had approved a $16 million loan to Azure Power Rajasthan in India to build a 5-MW project using First Solar’s panels.

The volatility of the solar market and the hefty costs required to bring a technology to market might explain why First Solar’s chairman and former CEO, Michael Ahearn, told Dow Jones that he won’t be looking for any solar investment with his newly launched, private $300 million fund.