Over the coming months the solar industry is set to experience its own version of natural selection, as surplus capacity and falling prices triggers a significant reduction of the number of companies in the marketplace, according to a new report from Bank Sarasin.
However, the paper, titled ‘Solar industry: Survival of the fittest in a fiercely competitive marketplace’, claims that this shake-up will actually benefit the industry in the long term. By ridding itself of the weaker companies, overall growth prospects will improve, with new sales markets and additional applications for PV encouraging newly installed capacity to rise by an annual average rate of 18% between now and 2015.
The long-standing imbalance between supply and demand – production capacity stands at 50GW and end-of-year sales are likely to be 21GW – has seen industry analysts forecasting a reduction in the number of companies for several years. Small- and medium-sized companies are likely to be the major victims, while their internationally diversified and vertically integrated rivals, such as Suntech Power, First Solar and Solarworld, benefiting from the changing landscape.
European companies appear particularly vulnerable to the possible cull due to the expected stagnation, or even contraction, of the PV market on the continent. Among the firms likely to be affected are household names Conergy, Q-Cells, Solar-Fabrik and Sunways.
While Europe suffers, Bank Sarasin is predicting grown in several emerging solar markets and by 2013 more than 10 PV markets will have an installed capacity of at least 500MW. PV markets will not only become more diversified in geographic terms but also in terms of the different applications for solar installations, and the companies that will profit most from this change will be those which develop new products and services to augment their module sales.
A similar pattern is likely to emerge in the thin-film sector. Over the past 12 months, the number of companies in the thin-film industry has reduced by one-third, leaving just 100 remaining active. However, the future is bright for many of these. By 2013 all the top 10 companies will have at least 500MW of production capacity and, boosted by large, financially strong corporations such as First Solar, Sharp, ShowaShell, GE and Hanergy, thin-film technologies should be able to achieve average annual growth rates of 32% over the next two years.