In a weekend piece over at Barron’s, Eric Savitz sees a rough road ahead for the solar industry as capacity continues to outpace demand for years tocome. He highlights the fact that while demand has picked up ahead ofthe German solar subsidy cuts in a few months, capacity still outpacesdemand and the situation will only worsen as the German subsidy cutstake place, putting some solar laggards out of business.
Its a natural evolution of any evolving industry and the solarindustry is still in need of a shakeout. It’s actually amazing that somany solar companies managed to survive the financial collapse of 2008,but don’t expect many of these companies to survive in the years tocome. Some will get bought out, some will go under, but the industry is in great need of consolidation.
Savitz points out that Lux Research analyst Ted Sullivan seessupply and demand coming violently back into parity through companyfailures and zombie firms in China, where much of the excess takesplace. However, he doesn’t think US based firms are immune and singlesout Evergreen Solar (ESLR) and the solar division of Energy ConversionDevices (ENER) as vulnerable.