Red figures, job cuts in Germany's PV industry [PhotoVoltaic solar cells]

[FarCenter]

Christoph Hammerschmidt - EE Times - (11/12/2009 11:33 AM EST)

MUNICH, Germany — Price pressure, caused by overcapacities in the worldwide solar panel business are exerting pressure on the solar panel value chain. No surprise that the quarterly figures of German PV vendors Q-Cells SE and Conergy AG are written with red ink. And there's more bad news in the offing, says market researcher The Information Network.
How strong the price pressure is shows the example of Q-Cells SE (Bitterfeld-Wolfen): In Q3, the company increased the unit volume sold by 87 percent to 103 MWp. The sales figure of €184 million (about $274 million) however increased only by 30 percent over Q2; for the first nine months of the year revenues even declined by 41 percent compared to the same period last year. The company blames the strong price deterioration in the international solar cell markets for the sales decline.

On this sales the company wrote an operative loss of €163.8 million — for the first nine months the losses amount to € 945 million and thus almost a billion euros. Adjusted by restructuring and other one-time charges, the company still wrote an operational loss (EBIT) of almost 5 million euros.

At the opportunity of presenting the quarterly figures, Q-Cells provided details regarding a cost-cutting program announced already in August. The most prominent item is a headcount reduction by 500 persons — roughly 25 percent of the staff will have to leave by the end of the year.

Hamburg-based Conergy AG fared similarly bad. It saw its Q3 sales decline 14 percent against Q2. Against the same quarter in 2008 sales even fell by 40.3 percent. The company which produces and sells crystalline solar modules and inverters now achieved sales of €140.2 million (about $209 million). On this basis, it wrote a net loss of €20 million. Anyway, Conergy managed to reduce its losses; in Q3/2008 it almost had drowned in red ink at a loss of € 77.5 million.

The situation could continue to deteriorate. At least, this is what Robert Castellano believes, president of market researcher The Information Network. In a study he paints a gloomy picture of the industry's situation. According to Castellano, the ongoing contraction process will not peak before 2010. The market researcher predicts that as many as 50 percent of the solar manufacturers won't survive. "The freefall has begun," he said.

Castellano cites a number of examples. General Electric, for instance plans to close its only US solar panel factory. BP Solar is in the process of winding down its solar panel factory in Maryland and outsource it to a contract manufacturer, to name just the most prominent ones.

Chinese companies continue to increase inventory and thus increase the price pressure, Castellano warned. "Perhaps this is an attempt to become the worldwide leader in the solar market by eliminating the competition," he said.

<SNIP>http://www.eetimes.com/showArticle.jhtml?articleID=221601498&cid=NL_eet

[kristopher]

1. "Oversupply" = Prices for new technology are undercutting old technology

This is the market performing exactly as it is supposed to. As the newer, less expensive technologies drive older more expensive technologies out of business, the market share the older technologies will sustain the present less expensive generation of technology.

The significantly lower prices of the new technologies will increase overall demand and expand the overall market size, creating an incentive for investment by more manufacturers to compete among this new generation of technologies.

This is an ongoing process that will continue until the basic PV concept is replaced by a better idea.

You are witnessing an epochal change in the way humankind relates to energy.

[FarCenter]

2. No - more like too much capital chasing too many startups

Plus government subsidies that go up and down.

Lots of solar companies and wind companies will go broke or be acquired.

But as the story says, the center of solar cell technology will probably move to China.

[kristopher]

3. What do you mean "No"?

What I described is exactly what's happening. In fact, the cliche you employ is just another way of saying it if you eliminate the "too much" and "too many".

Start-ups are being funded by capital that recognizes 2 primary factors - new thin film technologies are an economic game changer and the trend in government support for renewables across the board is extremely positive due to climate change.

The only companies going out of business are those that can't compete with the new technologies. As they die off the market will shift more and more to thin film and that will require investment to keep up. So it is neither too much money nor there too many start-ups.