Solar Industry Facing “Gross Oversupply”

What happens to an industry when the price of a core component suddenly drops, the credit crisis hits, countries get ready to cut important subsidies, and a new type of technology is disrupting the established players? Well, for the traditional solar industry that’s what happened in 2009. As a result, 2010 will be a year of “gross oversupply” of solar modules and significant “consolidation” according to a report from Pike Research. In other words traditional solar PV suppliers and manufacturers are facing yet another rough year in 2010.
For some of the weaker solar players that means they could get snapped up by the bigger firms, who will be looking to acquire companies that are struggling for a discount. As Pike senior analyst Dave Cavanaugh put it in a statement, there are “190 cell and module manufacturers, making consolidation of weaker competitors an inevitable outcome.”
Other large manufacturers will be looking to acquire solar project developers, solar thermal companies, and solar energy monitoring companies in a bid to diversify and vertically integrate. Late last year MEMC Electronic Materials, a company that makes silicon wafers for the solar industry, announced that it would buy up SunEdison, one of the pioneers of the solar as a service business model. About the same time National Semiconductor said it had acquired power monitoring software maker Energy Recommerce.
Competition and consolidation might not be great for the firms that have to sell on the cheap, but it will likely help the solar industry accomplish two goals: make the solar industry financially stronger, and help drop the cost of solar even closer to grid parity. Competition “will create downward pressure for module average selling prices (ASPs), which will accelerate grid parity for the cost of solar-produced power to the 2013 timeframe in many markets,” says Cavanaugh. The solar companies that will survive will offer the lowest costs per watt, have the most efficient modules and will be able to provide vertically integrated services.
But of course the solar market is still growing pretty nicely, despite the jerk in supply and demand. The solar energy market will grow 43 percent year over year in 2010 to 10.1 GW, according to Pike.

 http://earth2tech.com/2010/05/19/solar-industry-facing-gross-oversupply/