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March 14, 2010
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| 21:35 EDT |  | CSIQ |
| theflyonthewall.com: | Prospects are "dim" for the solar industry in the coming years, Barron's says | | For the solar industry, 2009 wasn't just disappointing; it was a nightmare, says Technology Trader columnist Eric Savitz. Conditions in 2010 shouldn't be quite as turbulent, says Savtiz. The solar-sector earnings reports for the December quarter have been pretty impressive. However, Germany, the largest solar market, will follow in Spain's footsteps and cut the subsidies it pays consumers and businesses to sell power to the grid. Pricing has strengthened-but only temporarily. Looming ahead, there is simply too much production capacity for polysilicon, wafers, cells and modules, and the excess will linger for years, notes Savitz. That supports Savitz's long-term thesis about solar power, that someday, when it gets cheap enough, solar will be a significant contributor to the global grid. But in becoming cheap enough-in achieving "grid parity" with natural-gas-powered electric plants and other energy sources-it will wreck many solar companies. Ted Sullivan, an analyst who covers the industry for Lux Research, in a note last week said that at some point over the next couple of years, supply and demand will "come violently back into parity". This will happen through company failures and the emergence of "zombie" firms that exist in name only, with their plants mothballed, says Sullivan. Sullivan expects many low-quality producers to fail. But he notes that the glut "threatens the developed world as well." He singles out as vulnerable Evergreen Solar (ESLR) and the Uni-Solar division of Energy Conversion Devices (ENER). There are also deep troubles at some European companies. Financial woes triggered the resignation last week of Q-Cells (QCE.Germany) CEO Anton Milner, and there are kindred problems at Renewable Energy (REC.Norway). Sullivan says all of the European solar players probably will outsource manufacturing to China to stay competitive. Reference Link :theflyonthewall.com |
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