Despite oversupply and thin module margins putting many solar suppliers out of business in the past two years, a new report suggests the industry is poised for a quick recovery, thanks to consolidated supply and demand.
Lux Research’s upcoming report “Buying Low: The Solar’s Imminent Return to Health and Profitability” said by 2015 module capacity will decline to 58 GW due to industry financial constraints and non competitive companies.
Advancing markets, including China, will push world demand to 52 GW by 2015, compared to 31 GW in 2012. These factors will cause module oversupply of only 12%, drastically down from 100% in 2012. Module margins will gain close to 10%, compared to near-zero averages now seen.
As module margins increase and oversupply dwindles, expect wiser investors to creep back in to the market, while taking a longer-term outlook. Lux Research points out investors will consider technologies that enhance product performance and quality, while lowering costs. These include hybrid photovoltaic/thermal congregation systems, crystalline silicon cell technologies, and coatings for better quality modules.
Meanwhile, early industry leaders are becoming interested market players, again. BASF and Johnson Controls have made strategic partnerships, along with ABB, acquiring a bankrupt solar supplier.
With other companies seeking merger and acquisitions plus partnerships, expect to see entry costs go up in 2015, leaving some potential investors out in the cold, as the report suggests;
The industry’s rough maturation has cast it in a poor light, but solar’s growing presence in the future energy mix is undeniable, as also exemplified in the energy outlooks from several prominent oil companies. It remains to be seen is which corporate leaders will find mutually beneficial partnerships and investments early and reap the rewards of growth for a low price, and which laggards will miss out on the opportunity.
Given solar’s potential it’s easy to see why the industry will rebound quickly. In March, solar accounted for all new US energy capacity. This week, Google had announced they are building a new 96MW photovoltaic power plant in South Africa, showing yet another potential emerging solar market.
Now with the solar industry’s dark days (specifically module manufacturing) behind them, how fast can the industry grow beyond 2015? Stay tuned.
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