A Darwinian Moment in Solar

More bad news.  Panasonic discontinues expansion plans. Schott slows down its US production line and laid off 23 temporary workers. First Solar & CEO part ways. The dropping price of PV is great for consumers but distributors are losing money on modules they bought at a higher cost.  Because distributors are not ordering from the manufacturers, the manufacturers have too much inventory.  The manufacturers have to dump product so they are going directly to installers & project developers, so further depressing prices.  Count on more blood on the streets through spring 2012.  This is a Darwinian moment. The industry will survive and be stronger for it but count on fewer players.

The German Chancellor is in favor of cutting the solar incentives. Arg!

This is bad news for PV manufacturers.  The German market peaked at 7.5GW in 2010, is expected to be 5GW in 2011 and fall to 3.6GW in 2012.  I’m not clear on the implications for the US other than continued pressure on the mfg to keep prices low globally to absorb demand.  Manufacturers will continue to go out of business & consolidate (eg, Evergreen, Solyndra, SpectraWatt, CaliSolar) so those with strong balance sheets are likely to prevail.  Market reports suggest that PV prices will continue to drop but not at the pace they have over the last year.  Today’s best manufacturing cost (so zero profit) for c-Si is around $0.95/w to $1.05/w for Tier 1 Chinese companies.  In 2012 expect an additional $0.10/w to $0.15/w drop, and perhaps dime/watt drop in 2013 & again in 2014.  In this last quarter of 2011, demand has firmed up so I don’t anticipate prices drops until week one or two of Dec when mfg look to shed inventory.  Q1 2012, I expect prices to drop and more companies will have to throw in the towel.