Greentech Media’s Solar Summit, which I attended two weeks ago, offered the most sobering view of the industry I could imagine.
For those of you who follow me on Twitter, you got a pretty good idea of what the attendees — all high-level solar-industry leaders whose words carry great weight (and should) — were saying. And if all your understanding of the industry was based on this Summit, you’d think the industry would be dead in six months.
Which defies the facts on the ground as we know them.
After all (Assistant Editor Steven Bushong is screaming at his computer screen right now, wondering how many more times I’m going to remind people of this), the U.S. solar industry grew 76% in 2012 and shows few signs of slowing down this year, at least on the residential and commercial side.
On top of that, the consolidation of companies I’ve been calling for since last year is finally beginning to take hold. In the two weeks immediately preceding the Summit, Advanced Energy purchased REFUsol, and ABB acquired Power-One, beginning a much-needed consolidation of companies. Now if we can get the panel manufacturers to maximize synergies and unite, we will really see the industry take off.
Shayle Kann, Greentech Media’s all-star analyst (whose predictions I’d take to the bank), says that in 2010, there were 345 module manufacturers worldwide. In 2011, that number dropped to 312, and in 2012 there were 247.
By the end of 2013, Kann predicts there will be 145, and by 2014 there will be a mere 93 module manufacturers left.
As Paula Mints of SPV Market Research has said (and I’ve heard echoed by module manufacturer insiders), the glut of modules is keeping panel prices artificially low and is preventing existing companies from making any profits. This is not a sustainable trend. Once this consolidation ends (and it will eventually), those prices will by necessity tick up, providing companies with the means to survive, prosper and innovate.
Jonathan Pickering, vice president of global business development and marketing at China Sunergy (CSun), told the audience that China will let many of its module manufacturers go bankrupt because even they realize there are too many manufacturers on the market.
Believe it or not, that’s fantastic news.
Despite solar’s long history, it is still young in comparative terms. We had a gold-rush mentality in the early part of the century, and we’re still feeling the hangover effects to this day.
Every industry goes through a consolidation period (the automotive industry went through it after Henry Ford revolutionized the industry, the steel industry has experienced it — and they have much longer histories than we do). After it’s over, the strongest among the companies will thrive and solidify the gains this industry has made. They will expand the market and provide the impetus to make solar a significant (dare I say dominant?) part of the U.S. energy mix.
Even Kann foresees big things ahead. He believes 2013 will be the last “down” year for that industry and that 2014 will be another boom year. In 2016, he predicts we will install 9 GW of solar (by comparison, we installed 3.3 GW last year). That number could be revised upward considerably if the industry and utilities can work together to figure out rate structures (another hot topic at the Summit).
That’s why I can’t figure out why there was so much hand wringing. It’s hard to look at Kann’s own predictions and see anything but clear skies ahead. If we keep grinding and the market consolidates sooner rather than later, the solar industry will not only survive, but it will only get stronger.
So don’t be somber. Keep smiling, solar — our best days lie ahead of us.
Kendra Hubbard says
We saw similar consolidation in the roofing industry – from hundreds to about 8 manufacturers – this took over 50 years in that industry, far less for solar. I’m excited to see where we can go and I’m lucky to be a part of it, even if only peripherally at the moment. Thanks for your work, Frank!
Edmund Kelly says
A sober assessment is correct. Solar PV is stalled at 30GW/y for now and the next few years. The dollar value of the PV panel business is down to about $20B from a high maybe $35B in 2011. Industry capacity is around 60GW. Some consolidation is happening, but not enough. China is maintaining zombie firms. The fundamental thing to understand is that PV is not economically viable except for rare cases, and market demand is therefore driven by subsidies. PV installations are chasing subsidies which are declining in europe and increasing in Japan and China. The US has not been a significant PV player, but current prices and incentives have unexpectedly made PV projects profitable in places like California, and this year installations are projected at about 6GW. Perversely most of this is in the central valley in California, paving over the best agricultural land in the world. Overall, world PV demand is flat. When consolidation occurs and prices rise, demand will most likely fall in countries that don’t raise subsidies. Generally rising prices reduce demand. PV has made great strides in reducing cost but its learning curve is stalled with no significant new investment. Today’s panel prices are still not economically viable in even the best geographies. China and Japan’s willingness to subsidize more is the only hope for growth. The US subsidies were designed for residential deployments. I expect the current congress will not renew them.
Jamie Nolan says
Ha Frank, I love this post. This is how I see it too!