Recession dampens solar enthusiasm - first quarter, Akeena and First Solar: a tale of two strategies

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It is a tale of two strategies when dealing with the U.S. solar markets, be they consumer or business markets. Both Akeena Solar and First Solar have announced their first quarter financial results recently. The scale of each company is worlds apart and their approaches to a growing market segment are at polar opposites, and it shows. These two companies cannot be directly compared; using these two companies is purely to highlight a growing trend among many solar companies of focussing on certain end-user segments of the solar market.

With easily installed Andalay panels, Akeena Solar is targeting Mom and Dad installers in the U.S. and, through their connections with Suntech, the same audience in Europe. The unfortunate fact is that the current global credit crunch is hurting these very customers the most. It is Mom and Dad who are losing value in their housing assets at the very time that the cost of oil is driving up the prices of almost everything else.

Barry Cinnamon, President and CEO of Akeena Solar, acknowledged this in the announcement, “Since the beginning of the second quarter we have seen signs that a looming recession and tightening credit are weighing on consumers’ decisions to invest in residential solar installations – even with the price of energy skyrocketing.” Cinnamon goes on to say, “We now expect demand for the rest of the year to be weaker than we had originally envisioned and full year revenue to grow by 40% to 50% over last year.”

Akeena Solar announced a net loss of $4.6 million for the first quarter of 2008. While revenue grew 97% over 2007 for the same period, it is clear that the loss comes from strong spending in the quarter where operating expenses more than tripled to $7.1 million due to higher compensation expense and an increase in the number of offices.

In stark contrast, First Solar has taken a different road investing heavily in the toxic but highly efficient CdTe technologies that target utility-grade installations. Parts of Europe and the U.S. have now had serious targets put upon them to generate certain percentages of renewable energy and a host of new solar PV, CSP and CPV plants have been announced recently. Let’s not forget the new subsidised plans of SunEdison to revolutionise the California power landscape and who ‘may’ have received their first order.

Net income for the first quarter of fiscal 2008 was $46.6 million for First Solar compared to $5.0 million net income for the first quarter of fiscal 2007. First Solar’s product strategy may prove to be the right one in the short-to-medium term, and although Akeena may feel some of the pain of the U.S. recession in the short term, one thing remains constant: the future for solar in the U.S. is bright when companies like Akeena continue to support the solar power movement.
Barry Cinnamon concludes, “In the short term, the recession and ITC uncertainty will dampen investments in solar power; in the medium term, the escalating cost of energy will only serve to stimulate demand. In the meantime, we will continue to promote the benefits of solar power.”

Andalay Solar Panels installed for your Mom and Dad 

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