Solar has grown to become an energy source. In a process, it became a political stage for controversy and embarrassment. Bankruptcies, threat of duties on importation, financial pressures, all contributed to depressed reality of equity in companies. Despite the popular belief, solar is booming. It may not be a mainstream knowledge, but the amount of technological innovation for industry pronounced as suffering, is amazingly large. In contrary the industry is reshaping itself. The current state is a temporary retrenching, where the technological improvements will create new-generation products, with low cost, capable of combating dropping ASP.
The current state is a result of natural actions which drive all markets. Companies built up the scale to drive cost down and to meet demand. Normally doubling of the output would create 20% savings in cost. Seeing the demand, many businesses decided to become solar companies. Due to the quick learning curve in areas of the value chain, they were successful and quickly markets become saturated. Average selling prices followed into a tailspin on oversupply. The new phenomenon made the stage. The market decided to wait out purchasing to squeeze more benefit through further lowering of the price. Panic induced liquidation tendencies become dominant, causing even greater saturation.
In succession of steps, many private enterprises retreated, as production cost exceeded the selling price. Bankruptcy has engulfed some of the names and will affect companies, which had limited earnings' potentials, even prior to this depressed environment of today.
Solar is assumed to be a commodity driven market without differentiation. Only technological breakthrough at the customer end supported by cost reduction in operational processes will help to balance the value proposition. Those processes will be different in origin, one being an organic growth, in-house or shared with third party developers. Another, through equipment manufacturers, who will provide cost resolutions to new processes or create a novel process to improve existing products.
Existence of the external growth through mainstream manufacturing will continue to present an opportunity to entrants, particularly rich in cash, to acquire resources, which will lead to cost controlled products. However, such energies are not sustainable without honest desire to participate in the market which is always reinventing itself to meet parity with other energy sources. That risk cannot be avoided, and the recent delays have shown that wait and see is the approach of choice for some.
The concept of takeover hasn’t been explored for many reasons. This obvious critical factor is observed in the limited value of legacy equipment in light of potential consolidations. None of the low tier producers offer worth at the top of the food chain. Large conglomerate companies which indicated interest, consider the entry on their own, exposing themselves to the innovation race fallouts. They place a financial investment, to take part, but without engagement to take over operations or probe through insignificant injections of capital in smaller, but innovation driven shops. None of the leaders are being tapped at this point as the impending outcome is not fully known.
It appears that solar industry must implode first, shed the layers of circumstantial participation, before the clear leaders are defined.
As usual, the obvious strengths will be relied on when such a leadership is forged. Financial health may be considered a priority not only for acquiring necessary knowledge externally or through organic method, but simply as a sustainability source. The amount of cash, debt burden, and even perhaps still existing ability to produce profit, should be understood. Earnings, however, are not necessarily the critical and sole answer. Assuming the depressed environment, selling off for cash generation is accepted. Ability to use of this cash for resolution leading to the cost reduction is the ground breaker here.
Investors should look into R&D budgets and spent to see a value. They should understand who is moving into new methods to produce and design product. They should also know who is managing those with least cost and able to offer lowest price.
Based on the list of factors the optimal companies will be the ones following this setting:
1. Cash, the ample amount of it which helps pay for innovation and support business operations.
2. Manageable amount of debt, allowing technological growth but not impeding the cash flow
3. Scale which produces revenue with short cycles of return, technology driven.
4. Already superiority of cost accounting, which through proper engagement of innovation will increase margins.
5. Innovation announcements, creating relationships with innovation and design companies, which will lead to introduction of new products and technology uses.
6. Brand name, stability and staying power assured.
Itemized technology breakthroughs which show potential to reshape solar for next one to five years based on upgraded efficiency / conversion and process improvements within the value chain.
Polysilicon production:
Chlorohydration, FBR
Ingot/wafer:
Quasi mono, lower cost of mono poly by process improvement, load size, diamond saw, reduction of thickness and kerf, n-type wafering, quasi mono wafering.
Cell:
Selective emitter, MWT, EMT, IBC, HIT, HIJ, new metallization, cell size increase.
Module:
AC adapters, non-reflective glass, less metal and larger aperture
