Will High Oil Boost The Solar Industry? $TAN
The speculators (in my opinion) are at it again in the oil market.
Theworld economies are inching up out of the quagmire and oil is at an 18month high. I don’t get it! Nevertheless, this is going to have bigimplications on the solar industry. High oil prices will be an impetusfor solar energy and other renewable energies to replace traditionalenergy.
As the readers of this column are aware, I have beendown on the solar industry for some time, primarily because of theexcess capacity of the solar manufacturers and the fact that governments are broke and subsidies are lacking.
I am particularly negative about the amorphous silicon solar cell manufacturers. I pointed out in a February 16 article on TheStreet.com that many are in trouble. Aftermuch bashing of Applied Materials and its amorphous silicon program byGreentech Media, German thin-film solar company Sunfilm has filed forinsolvency, affecting some 300 workers at its production lines inGrossroehrsdorf and Thalheim.
Applied Materials had intended tocapitalize on the rise of the thin-film segment with its SunFabproduction line, which Sunfilm uses at its production line inGrossroehrsdorf.
Sunfilm claims its business plans have beencrippled by Germany’s plans to sharply reduce its solar feed-in tariff,as well as by the emerging dominance of US-based cadmium telluridethin-film maker First Solar.
With polysilicon so cheap, whywould someone want to purchase amorphous silicon panels withefficiencies half that of polycrystalline panels, which can now bepurchased from China for $1.65 per watt. Solar start-ups a few years ago that purchased turn-key equipment have no IP and every other customerof the equipment suppliers became an instant competitor selling the same product using the same process and equipment. Companies need todifferentiate themselves.
Inventory levels have risensignificantly within the solar panel industry even though many marginaland smaller companies exiting the market. Supply clearly still exceedsdemand, and will continue to grow from an average of 71 days in 2008 to90 days in 2009 (see chart).Source: TheInformation Network, USA
In 2009, our research shows that5,963 MW of solar power was consumed but plants worldwide had a capacity of 17,397 MW, bringing utilization levels to 34 percent. The additional capacity equated to lower profits for the solar panel manufacturersbecause revenues were expended to build or lease large facilities andpurchase more equipment.
Other than that, companies don’t have to make the product and under ideal conditions only make what they cansell. That worked fine during the salad days of the past few years, with inventory averaging 71 days in 2008, up from 63 days in 2007. In fact,inventory escalated in Q4 2008 with the downturn in the economy.
Along with the worldwide Great Recession came a drop in demand for solarpanels. For 2010, we forecast an increase in solar panel consumption to7,572 MW. At the same time, new additional capacity will be brought onboard, to levels of 23,366 MW. This will bring capacity utilization to32.4 percent and reduce inventory to 96 days on average for all of 2010.
Solar power production will reach 19.3 GW in 2012, a CAGR of 40.7percent between 2003 and 2012.
If solar is the place to be,material and chemical suppliers to solar manufacturers will see reallypositive results.
I’m flying to Shanghai in a few weeks to meetwith Chinese Solar Cell manufacturers interested in utilizing mynanocoating that improves solar efficiency by 10 percent, developed bymy company SolarPA.
Many of you readers know that US chemical and materials suppliers have not had the greatest enthusiasm for theproduct, succumbing to the NIH (not invented here) syndrome. On thecontrary, Chinese manufacturers, who are eating everyone’s lunchalready, are extremely impressed, which will only serve to make themmore competitive against US and European manufacturers.
Dr. Robert N. Castellano, TheInformation Network
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