Half of German solar firms could go under
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.
"Few German vendors have a brand that customers
recognize," Henzelmann said.
Small and medium-sized companies could suffer as
the pressure to grow in production and sales
increases.
"Since only a few German companies can achieve the
necessary critical mass on their own, partnerships in
the form of mergers or cooperative ventures make a
lot of sense," Roland Berger writes in a news release.
Germany's Q-Cells, once the world's largest solar cell
producer, during the global recession lost billions of
dollars.
Thanks to the domestic sales boom in the first half of
this year, the company expects a positive result for
2010. However, Q-Cells shares are trading at their
lowest in years, with many analysts giving them a
"sell' rating.
Apparently aware of the consolidation course in the
industry, Q-Cells Chief Executive Officer Nedim Cen
this week raised fresh capital on the stock market in
a bid to transform the company into a full-service PV
provider.
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