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30 September 2010

Half of German solar firms could go under

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Only half of Germany's 50 major solar energy companies will survive the accelerating price war in the photovoltaic industry, a market study compiled by consultants Roland Berger indicates
Due to oversupply and cheaper production, the consultants forecast prices for PV products to drop by 15 percent per year until 2015. Because of a "threefold threat of low-cost competition from Asia, declining sales at home and a dwindling presence in the world's growth markets" many German firms will have to offshore their production to low-cost regions or face bankruptcy, the analysts write.

"The photovoltaic market is getting tougher and tougher," Torsten Henzelmann, a green-tech expert at Roland Berger, said in a statement accompanying the release of the study. "The German PV companies have excellent technological capabilities, but they are not properly prepared for the difficult market climate."

Henzelmann added he expects that "only about half of Germany's 50 or so larger solar power companies will survive in the next five years."

The German government this year agreed to reduce subsidies for rooftop panels by 16 percent. The decision helped the German industry to a sales boom, as private customers ordered panels in droves to beat feed-in-tariff reductions set for July. Sales dropped afterward, however, and many German firms are trying to enter emerging markets in North America, India and China to make up for lost business at home.

Not all of them will succeed, Roland Berger says.

The study found that only six of the 16 largest German solar power companies have healthy finances and a strong strategic position when facing growing competition. The remaining firms are ill-prepared, mostly because they lack production size, market access and prestige.


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