Now that oversupply is just around the corner, for solar cells and everything upstream, where does it take the industry?
Consolidation, price reductions and market share attacks are what are to be expected of traditional commodity product or commodity service players. Those who have little distinction will be the ones to feel the biggest brunt of this pain, and in that category its best to count those who are most exposed to such crisis, the least vertically integrated. The ones who have no buffer room, no economies of scale to match the big boys and no distinctive advantage will be hurt. Who will be helped?
In times of such movements, it is the ones that have the cash to absorb, the market share drives to gain, the distinction in products to sustain pricing and the aggressive to pursue opportunities that will cost less as players are bought up or fall down.
ICP Solar is well placed in this situation, because of our distinction and aggressive pursuit of new clients. As reported in previous financial documents, we are gaining new clients at record rates and the change from a split personality (manufacturing and intellectual assets) to focus simply on intellectual property in marketing and product innovation, is well underway. With significant product launches in the coming months thanks to large development investments in personnel and product in the past few, we look to 2009 with a very clear message to the entire industry: Distinguish yourself or perish.
Sass
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An interesting article:
U.S. solar boom to include manufacturing, too
The United States is poised to become the world’s largest user of solar power in the next decade, experts say, thanks in part to Silicon Valley innovation and the country’s vast land area and amount of sunshine
And that title will bring an unexpected benefit: Manufacturing jobs arriving in the United States rather than being shipped overseas. Solar companies have determined that it makes economic sense to manufacture close to your market, because among other factors it reduces shipping costs.
“Global companies are looking for the next hot market,” said Julia Hamm, executive director of the Solar Electric Power Association. “It’s going to be the United States.”
At the Solar Power International conference here last week, about 20 percent of the 22,500 participants represented international companies, said Hamm, whose group along with the Solar Energy Industries Association staged the week-long expo.
Germany and Japan can boast of more solar installations today, but the U.S. is catching up for a number of reasons, ranging from the nation’s land to the amount of sun and Valley solar companies. Add to that the recent passage of an eight-year extension of a solar tax credit and a lifting of the tax cap on residential projects, and most experts expect the U.S. to become the No. 1 solar nation in the next decade.
“We believe strongly that you can manufacture these technologies in the U.S.,” said Anna Schneider,
spokeswoman for Solar World, based in Bonn, Germany. “We believe in the market.”
Last week, for example, her company opened a factory in Hillsboro, Ore., which has the capacity to make 500 megawatts worth of solar cells by 2011. Solar World is calling the new facility the largest photo voltaic plant in the U.S., and says it will employ 1,000 people. Schneider said the plant will make 100 megawatts worth of PV solar cells before the end of the year, which will grow to 250 megawatts next year and reach capacity of 500 megawatts by 2011. (Although solar power is intermittent, the accepted industry norm is that one megawatt of power generates enough electricity for 750 California homes.)
With the world’s solar industry expected to grow from $20 billion last year to $74 billion by 2017, more factories are likely to follow.
“The U.S. is potentially the largest future market,” said Steven Chan, the chief strategy officer and president of global sales and marketing for China-based Suntech. Chan moved to San Francisco this year to implement that company’s North American strategy. Right now, he said, U.S. sales represent less than 10 percent of Suntech’s revenues.
But in just a few months, he has expanded the U.S. workforce from five to 50 with plans to expand the number of Suntech dealers froms 25 to 150 or 200. The company also made two recent deals to become more competitive. It bought EI Solutions of San Rafael to be able to create utility-scale projects such as the one SunPower announced with PG&E. And it formed a joint-venture called Gemini Development with MMA Renewable Ventures of San Francisco to be able to finance large projects.
In the near future, perhaps two to four years, Chan said, the company will consider opening manufacturing sites in the United States, or Mexico, or Europe.
SunPower, the large, publicly traded solar-panel maker based in San Jose, manufacturers its solar panels in the Philippines, where it made about 100 megawatts worth in 2007. But several Silicon Valley start-ups, including Solyndra in Fremont and Nanosolar in San Jose, already are manufacturing solar cells locally.
“We built here because Silicon Valley is just a unique place in terms of concentration of talent, investment, innovation and just a different drive for the way things are done,” said Chris Gronet, Solyndra’s chief executive officer. The company’s second factory also will be built in Fremont, since a Department of Energy loan guarantee mandates a U.S. location.
San Jose Mayor Chuck Reed sent some city staffers to the Solar Power International conference as the city pursues a half-dozen clean-tech companies. Combined, Reed said, the companies are seeking nearly 2 million square feet of space. “They have interesting requirements,” Reed said. “They would like to do manufacturing here. That means big buildings with tall ceilings.” And jobs, he said.
At the Solar Power International conference, many of the world’s leading solar companies talked about expanding to meet the expected increase in demand for solar panels in the United States.
Sharp, which still makes most of its solar cells in Japan, began manufacturing some in Memphis, Tenn., in 2003. It recently expanded the plant’s annual output from 60 to 100 megawatts of panels.
“There’s tremendous growth potential for solar in the United States,” said Ron Kenedi, vice president of the Sharp Solar Energy Solutions Group.
Other solar makers, including Germany’s Schott Solar (in New Mexico) and Q-Cells (in Mexicali, Mexico) as well as First Solar (in Perrysburg, Ohio) have announced North American expansions.
Solar World also makes solar cells in Camarillo in Southern California, but decided it needed a larger U.S. presence, Schneider said. Hillsboro is also where SpectraWatt, Intel’s solar spin-off, will build its factory, slated to open in 2009.
Oversupply will start new and dynamic phase in rapidly growing solar industry. The worldwide market for solar (PV) energy and the PV industry itself have grown substantially in 2007 and early 2008. However, growth in the production of solar panels appears to have outpaced growth in the demand side of the market. I agree oversupply is just around the corner but that is in the medium term.
Growth in the worldwide demand for solar panels is still entirely dependent on, and limited by, local subsidy programmes. In various countries new subsidy programmes are commencing, but in the largest markets contributions are being cut back. 2008 – 2009 could therefore be a turning point and a crucial couple of years for the development of the international PV market and industry.
The current developments look like the famous ‘hog cycle’ scenario: the rapidly growing (world) market has attracted many new producers. This could create an oversupply situation, leading to falling prices and “left”>consolidation in the market and further expansion.
Therefore, a surplus supply of solar panels in the next few years to 2010 could lead to considerable price reductions and a consolidation in the PV industry. This makes the next few years a crucial period, but also a prelude to a new era after 2010, in which grid parity will be reached in a growing number of market segments. This means that the cost per kWh of solar power for private individuals, for example, will be competitive with kWh from the grid.
From that moment on, the PV industry will be heading towards rapidly growing demand once again, which will no longer be dependent on and limited by subsidy programmes. This could lead to unprecedented growth opportunities for the PV industry and perhaps even an undersupply situation.
During Intersolar (Munich) this year I was talking to many of the leading companies and commenting how big the show was( 5 hangers) – the responce I heard many times was those little companies wont be here next year! possibly and certainly large scale integration is something that is on many agenda’s right now.
We promoted Intersolar for solar promotions and Hurst Dorfner infroms me that next year there are already plans for a dedicated Solar Thermal “Hanger” which is testimant to the long term prospects of PV even during difficult times.