Over production will wreck havoc on solar module makers in the next three years, with some firms forced to exit the market.
The amount of excess solar cell production capacity reached 5.2 GW in 2009, or about half of anticipated 2010 sales
This fallout is the result of many factors. Sinking demand due to last year’s recession pushed many manufacturers to sharply cut prices. The lower pricing hurt profits. At the same time, key cuts in feed-in tariffs (Spain last year and Germany, Italy, France and the Czech Republic this year) reined in growth expectations, with sales slowing again later this year.
But the gap between production and demand is the big challenge for the industry and one that will continue for three years or more as healthy companies add factories and weak ones find they can no longer fill theirs.
Johnanna Schmidtke, an analyst at Lux Research, estimates the excess capacity reached 5.2 GW at the end of 2009 – or the equivalent of roughly half of all 2010 sales.
This massive over supply will force second-tier producers to begin to idle factories late this year and eventually shut them down. Among the most vulnerable are Perfectenergy of China, Sunfilm of Germany, Solland of Holland and Malibu of the U.S., says Schmidtke.
Others will be forced to outsource manufacturing to cut costs. Candidates include SolarWorld, Q-Cells and Evergreen Solar, says Schmidtke.
Market leaders such as First Solar, Suntech and SunPower will likely ride through the tough times, but not without feeling cost and margin pressures.
Crystalline silicon and cadmium telluride thin film cells will likely dominate the market in two years, just as they do today. But prices will be lower. As to other thin film technologies (CIGS in particular) there will be fewer companies to vend them.
Posted by Mark Boslet 
