After Solyndra: finding opportunity in the shifting solar industry

1Executive Summary

The global solar market added 27.7 gigawatts (GW) of photovoltaic systems in 2011, a 70 percent increase over 2010, according to the European Photovoltaic Industry Association (EPIA). Europe continues to be the biggest solar market. Germany and Italy accounted for nearly 60 percent of the new installations in 2011, according to the EPIA. As the European market matures, manufacturers and developers are exploring new territories. The United States, along with China and India, are the upstarts, thanks to their solar-friendly policies.

This report analyzes the photovoltaic industry overall. In particular, it examines the U.S. market and will look at the intersection of manufacturing, policy and finances.

Solar companies worldwide will remember 2011 as a dark time in their history, when falling government incentives and a pileup of unused solar panels with plummeting prices led to shuttered factories, layoffs and bankruptcies. The failing of Solyndra symbolizes that market volatility. The financial woes in Europe — marked by efforts to reduce national debts of countries such as Greece and Italy — also have reduced the banks’ willingness to loan money for installations.

The industry has begun 2012 with some trepidation. Many manufacturers are on the warpath to cut costs and reduce output significantly. These moves give the market a chance to reduce inventories and get production more in sync with demand. But recovery will likely take a few quarters to achieve.

On the flipside, companies that install solar energy systems are happy to see the price declines, which have promoted many to switch from using concentrating solar thermal to photovoltaic technology.

Project developers and manufacturers generally have a good idea of what government incentives they are likely to receive in some of the key markets in the next 6 to 12 months. But there is never 100 percent certainty, since incentives could change, say, when a new ruling party emerges after an election or the economy tanks and the government adopts cost-cutting measures.

Meanwhile, the solar industry in the United States is watching for any big impact from the end of a lucrative federal cash program that covers 30 percent of the cost of installing a solar energy project. The program ended on Dec. 31, 2011.

Some industry executives worry that the market won’t grow as quickly without the federal program. A trade dispute brought on by seven solar manufacturers against Chinese solar cell and panel makers also weighs heavily on the minds of solar executives, including installers who are concerned about a rise in solar panel prices as a result of the dispute. The complaint alleges that Chinese manufacturers are flooding the U.S. market with products at artificially low prices after being heavily subsidized by the Chinese government. The complaint is asking the U.S. government to impose duties on Chinese solar cells and panels.

We examine the state of the industry first by region (Europe, Asia, the United States), then by the gear makers, the Solyndra fallout and, finally, what trends and companies to watch in the coming months.

 

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