Solar Shakeout Continues, But End May Be in Sight

Could last be first and First Solar last?

2 min read
Solar Shakeout Continues, But End May Be in Sight

The solar shakeout continues, as the stakes rise. Yesterday China announced new tariffs would be imposed on imports of higher-end cars made in the United States, in what appears to be payback for the anti-dumping tariffs the United States has been imposing on solar imports from China. Tellingly, the Chinese automobile tariffs are expected to especially affect cars manufactured in the United States by Germany's Mercedes and BMW; the solar lawsuit that is leading to higher U.S. tariffs was filed by the U.S subsidiary of a German photovoltaics manufacturer.

A vicious cycle of retaliatory anti-dumping tariffs obviously is not good for the world economy, but it may be good for the U.S. and European photovoltaics industry. China's competitive edge may be somewhat blunted in the coming year, somewhat making up for declining solar subsidies in many of the advanced industrial and fast-industrializing countries. Meanwhile, however, retrenchment and consolidation continues to shake the solar industry.

Mergers and acquisitions have been particularly heated in solar services, notes GigaOm's estimable Katie Fehrenbacher in a recent post. Examples have included the purchase of SunEdison by MEMC Electronic Materials and of Energy Reommerce by National Semiconductor; Spain-based solar developer Fotowatio is buying most assets of SunEdison competitor MMA Renewables.

Another trend in solar is the growing dominance of really big energy players in the ownership and operation of grid-scale projects, as detailed by Fehrenbacher's GigaOm colleague Ucilia Wang. Duke Energy, NRG Energy and--most recently--Warren Buffett's MidAmerican Energy Holdings are among those that have made major acquisitions. "During a recession, the biggest companies end up making most of the capital-intensive plays," comments Wang. That's why "solar service startups like SunEdison and San Francisco-based MMA Renewables just couldn’t survive on their own" in a difficult market.

First Solar, one of the highest flying U.S. PV manufacturers in recent years, continues to be hard hit by the combination of Chinese competition in generic polysilicon and declining governmental subsidies worldwide. The company, having just executed an emergency change of leadership, has just issued another earnings warning and announced a second restructuring in less than two months. Two and three years ago, First Solar was getting huge attention because of its claims to be producing thin-film PV material at close to $1 per installed Watt, feeding speculation that photovoltaics might be subject to some kind of Moore's Law. It remains the world's largest solar company in terms of market cap. But its stocks have taken a terrible beating, trading now at less than a fifth the price obtained at the beginning of the year. In its latest attempt to get ahead of the curve, the company laid off 100 employees--60 of them in R&D, which does not seem a good sign.

The company's interim CEO Mike Ahearn says the company is now targeting unsubsidized solar markets. That sounds good on paper. But what unsubsidized solar markets is he talking about? I haven't heard of any.

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