Silicon feedstock doubles in price. Solar cells go up by 30%. Retail prices gain only 5-20%. See the solar squeeze?
Everyone is complaining about it. What to do? Innovate. Separate. Distinguish….or die. With an industry short of supply, but consumers unwilling to pay much more, we all need to be aware of the solar price squeeze symptom. It will surely affect more at the higher end of the power spectrum where its already difficult to get consumers to fork out $40K for a solar-powered home system. Yet it will also affect the lower power spectrum as well. So the key to surviving in such a market, will be to distinguish.
When you have solar dealers operating at 5% margin on a solar panel, a full margin retailer sell that same solar panel and seem competitive. And nobody that I know wants to look uncompetitive! So the choice is to either take a serious margin bite and hope you can make it up on other things (ie. solar becomes a loss leader for you), or you innovate and separate by offering products, services, etc. that others don’t.
The market is set to continue price hikes into 2006. We have not seen the end of it yet. Yet I feel that around second half 2006, we should begin to see the effects of new feedstock plants coming online and thus some relief. It will surely be welcome.
In a world where everything linked to oil (from plastics to transport) is going up in cost, the last thing we need is for renewable energy to become far too expensive to afford.
Sass