The precipitous fall of module prices has led to a few casualties in solar. Evergreen Solar filed for Chapter 11 bankruptcy, and is currently trying to sell its assets and core “String Ribbon Technology.” With falling polysilicon prices (currently between $55/kg and $60/kg), the company couldn’t compete with standard crystalline silicon technology which, as we’ve mentioned previously*, has been made substantially cheaper by Chinese manufacturing firms. Chinese manufacturers have enjoyed continuing support from the Chinese government through inexpensive capital, low prices for electricity, and low labor costs. This is clear evidence that government subsidies and support are extremely critical to the growth of the solar industry.
Meanwhile, Solon announced that it has decided to shut down its Tucson facility given its inability to be cost competitive with the low-cost Chinese module manufacturers and instead focus on its project development and power plant business.
In addition, high-cost American sweetheart Solyndra was forced to shut its doors and file for bankruptcy. The start-up attracted high scrutiny for its inability to compete due to significant price drops in polysilicon, even after receiving a loan guarantee from the U.S. government. And Ascent Solar*, a thin-film CIGS manufacturer that was likely heading the Evergreen route was rescued by TFG Radiant Group of China, by signing a royalty and strategic partnership agreement.
Non-cost-competitive technologies and companies with poor strategy and balance sheets will likely go out of business faster given the shift in demand dynamics worldwide for PV that have significantly impacted module prices. This news bodes well for all the low-cost Chinese manufacturers such as Yingli, Trina Solar, and Suntech, all of which are better able to withstand the low-price environment. This news should make smaller thin-film solar companies wary of the competition in the industry.
Crystalline silicon (x-Si) PV modules comprise the largest and most established portion of the photovoltaic (PV) module market, holding roughly 81% of the global PV market in 2008. These x-Si modules also have significant penetration in all sizes of grid-tied applications – from residential to large-scale utility installations.
A handful of large, top-tier manufacturers dominate the market, but smaller start-ups with differentiated technologies are still entering. As the module oversupply rolls through 2009 and 2010, some crystalline silicon module manufacturers will be at the heart of the shakeout.
Examining the performance of companies in this technology area, we find that:
Large corporations with differentiated technologies are among the strongest performers.Many of the highest ranking companies are large corporations that stand out due to top-level high-efficiency products and large corporate backing. Their backing provides support for module warranties, capacity expansions, pricing battles, and technology development.
New competition from low-cost manufacturers is driving down the value of European leaders. European module manufacturers with high-quality x-Si module technologies are beginning to struggle as module production becomes increasingly commoditized. Their quality advantage is beginning to slide as new low-cost manufacturers gain access to higher-quality materials, dropping their scores on technical value scale.
Even with promising technologies, start-ups face formidable barriers to growth. The most successful pure-play solar firms got an early start in the market, and offer either differentiated technologies, sharp business execution, or both. New entrants to the solar market need more than a novel design or slight technical advantage to succeed. Companies building capacity, especially those based on a novel technology, score lower than those with existing capacity because they must play catch-up with more traditional and established manufacturers. The outlook is increasingly bleak for start-ups with unique technologies that are yet to build production capacity.