A pattern that’s common in the growth of so many industries looks like it could soon take hold for solar – the pioneers get the industry going, then there’s an eventual shake-out, driving many of them out of business or gobbled up by the big guys, who enter later and take over.
The hard times for solar manufacturers that we’ve heard so much about lately are threatening German solar pioneers like Conergy, Q-Cells, Solar-Fabrik, Solon and Sunways – when’s the last time you even heard those names mentioned?
So far, SolarWorld is still in the running, but they clearly feel endangered given their recent actions against China in their petition for tariffs.
US-based First Solar is also expected to survive, and we’ve already seen a giant oil company (Total) take a majority stake in SunPower.
In the Chinese group, Suntech, Trina and Yingli are viewed as strong enough to continue on.
The slew of Chinese companies that emerged over the past few years did so because of easy credit offered by state banks, and now they are struggling under heavy debt in a time when their profits are washed out from low prices.
In fact, China’s Ministry of Industries and Information Technology has proposed pushing smaller players to shut down in favor of creating a couple very large (5 GW capacity) and several medium-sized solar companies (1 GW capacity), reports Reuters.
Suntech currently has the largest capacity in the world at 2.4 GW of production.
The top six solar manufacturers rose in market share from 26% in Q2 2010 to 55% in Q2 2011, says Suntech’s CEO. He expects the trend to continue, as more customers want to work with "long-term" players.
Furthering this trend, China’s banks have been tightening lendng, only working with certain solar companies now.
Private financing has also dried up for small solar companies, giving them no choice but to merge with competitors or sell to large companies.
Last year, South Korea-based conglomerate Hanwha Chemical Corp bought a 49.99% stake in Solarfun Power, giving it the ability to withstand the industry’s turmoil.
Large companies that are likely to benefit include longtime solar leaders Sharp Solar and Kyocera, as well as Sanyo, LG Corp, Samsung and Hyundai, who are entering the field in big ways.
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Don’t accept private financing from “vulture” capitalist as nirvana. A few of them got huge payoffs in the first round by the American taxpayer courtesy of the Department of Energy. Large companies such as China’s Solartech and America’s Solon are top-heavy and cannot match the costs of more nimble companies ready to exploit their weaknesses, unless they bankroll politicians to slither as their formula for success.