Report: Sun Won't Shine on Solar PV Manufacturers Anytime Soon
Photovoltaic industry oversupply as graphed by GTM Research.
A new analysis of the global solar market predicts that the American photovoltaic industry will continue to contract through 2014 at least, with a number of companies either folding or being acquired by other companies.
The report, "Global PV Module Manufacturers 2013: Competitive Positioning, Consolidation and the China Factor" released Tuesday by GTM Research, credits what it calls "aggressive" oversupply and faltering feed-in tariffs for the sluggish market.
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The report's author, Shyam Mehta, also places some of the blame for the slow market on "commoditization," which he defines as "the perception in the minds of buyers that quality and reliability do not differ significantly from one producer to another." As Mehta notes,
The twin malaises of rampant overcapacity and commoditization have combined to result in a slew of plant closures, market exits and insolvencies over the past year and a half. However, the victims thus far have mostly been smaller producers in high cost regions, and this has done very little to alleviate the industry's troubles. With overcapacity likely to persist through much of 2013 and the balance sheets of most producers under severe stress, there is very little doubt that much more consolidation is on the way, and that the global PV module landscape is headed for a significant transformation.
Among Mehta's suggested causes of the current market consolidation, which had its roots in the global economic crisis of 2009, is slackening of global incentives such as feed-in tariffs, which prompted many prospective buyers of solar capacity to delay purchasing decisions, worsening the supply and demand imbalance.
In a podcast interview discussing the report, Mehta said that even the government-supported Chinese solar manufacturing sector will suffer some consolidation. But he predicted that China would remain at the forefront of the industry. "Chinese dominance is not going to change," said Mehta.
The full 67-page report, with a cover price of $1,995, was not made available to ReWire. Forbes contributor Ucilia Wang writes that in the full report, Metha predicts 180 photovoltaic manufacturers worldwide will either go out of business or be gobbled up by other firms by 2015, and that 88 firms will very likely shut down production capacity in countries with expensive costs of doing business, including the U.S.
This is all gloomy news for investors in solar manufacturers, but it's not so bad for people who want to buy solar panels. Installation businesses continue to be the strongest sector of the solar industry, and prices keep dropping. Mehta predicts that the planet will have about 33 gigawatts of surplus PV production capacity over the next couple of years, making it much more affordable to hook up to the sun and use less fossil-fueled electricity. It's a testament to how inside-out our economic system really is that that's considered bleak news for investors.
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