Intersolar – Reading Between the Lines

On the surface, Intersolar 2009 in Munich, Germany was business asusual: huge halls, filled to the brim with PV-related products of allshapes and sizes.

LDK hauled in raw poly rocks courtesy of its recently constructed plant. There was Applied Materials‘gargantuan-sized module, on display from the bevy of customers it linedup last year. There was a sleek PV-powered speed racer in Solarworld‘s booth. BP Solar‘sbooth featured an array of mimes lumbering around, face paint and all(part of the recently announced cost reduction plan, no doubt, but Ihaven’t quite figured out how). Of course, there were scantily cladwomen in body suits handing out brochures with seductive smiles (nonaming names, you know who you are).

And there were smiles all around. It was one huge solar party, and anyone who was anyone in attendance.

In other words, you wouldn’t be blamed if you didn’t get the sensethat the PV industry is in the midst of one of its harshest businessenvironments in recent years, the cyclical overcapacity phase of thebusiness cycle exacerbated by the recession and the credit crunch. Notif you talked to these folks, at any rate. How was business, you mightask these folks (as I did)? Oh, fine. Just dandy. Never been better.Opportunities galore. In other words, it still looks as if we’re in thedenial stage here.

But if you looked hard enough, you could see the cracks beneath the surface.

Attendance was certainly down from last year, and well short of capacity. Conferences were sparsely attended.

At the Solarplaza conference held earlier in the week (one thatfeatured a lot less spin), snap polls revealed that the overwhelmingmajority of executives and analysts think that demand will be flat ordown from last year, and module prices will continue falling into 2010.When you try to reconcile that with the sheer multitude of cell andmodule manufacturers in the game today (it was staggering just how manysuch companies there were that I had never previously heard of), itprovides a sobering reality check.

Year-end cell capacity by the end of 2009 will total 17 gigawatts.Compare that to, say, 7 gigawatts of demand (and given how few projectsare being done right now, even that’s optimistic), and what you have iscompetition, competition, competition.

The math is simple: idle capacity lines + near-term debt repayments + credit markets showing few signs of thawing = insolvency (DayStar, anyone?). In the meantime, the show, I suppose, must go on.

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