‘Dangerous Times’ For Solar Manufacturing, Says Expert
CARL FRANZEN NOVEMBER 17, 2011, 9:00 AM 1995 31
The global solar manufacturing industry is unquestionably headed for a thinning of the ranks, with up to two-thirds of all companies being forced to merge or go out of business thanks to the plummeting price and corresponding oversupply of polysilicon, the raw material used to manufacture most solar panels.
As Shyam Mehta, a senior analyst of solar markets at GTM Research put it to TPM in an email: “This is a dangerous time to either be in, or enter the solar manufacturing space. We are in a period of significant oversupply, price declines, and an uncertain (if not negative) demand outlook — lots of risk and not much near-term prospect of reward.”
Specifically, when it comes to U.S. polysilicon manufacturers, Mehta thinks that of the three American companies that currently produce the material, two are at risk of going out of the polysilicon business: REC Technology US Inc., a subsidiary of Norwegian company REC (Renewable Energy Corporation) and MEMC Electronic Materials, a Missouri-based company.
“The business outlook for these firms is therefore predicated on the success or failure of their non-poly business as well, which I would say, generally speaking, is not great,” Mehta noted. “Both of these firms actually have low-cost poly technologies that drive lower costs than existing processes (assuming same location and degree of integration), but their uncompetitive non-poly segments (wafer and modules for REC and wafers for MEMC) are weighing them down and could have a decisive say in their fate.”
But Mehta and a few other analysts are seeing a light at the end of the tunnel, no pun intended.
“If macroeconomic conditions improve (specifically with respect to the debt crisis that is affecting Europe), we should see demand respond to current low pricing levels that would help to bring supply back in line with demand,” Mehta wrote.
In addition, green energy analyst Richard Keiser published a new report in which he predicts rapidly increasing demand for solar installations, and thus polysilicon, throughout the U.S. over the next five years.
Still, he notes that “The rebound will come, but it will be asymmetrical,” as Forbes reported.
That hasn’t stopped Money Morning’s David Zeller from picking out the five solar energy stocks worth investing in for longterm growth, one of which includes U.S. firm First Solar, which has experienced a confidence-rattling management turnover as of late.
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