Solar Shakeout Survival Guide

on April 13, 2012 at 10:15 AM

There are many ways to survive in the solar business, but relying on protectionist policies and planning to serve only one part of the growing marketplace are not successful strategies for survival.

“A global manufacturer has to be willing to look at its product portfolio and participate in all aspects of the market,” Canadian Solar VP of US Sales and General Manager Alan King told Breaking Energy recently. Canadian Solar, despite its name, has an expanding presence around the world and is a NASDAQ-traded company determined to survive the fallout from falling panel prices.

There is a place for both large-scale utility projects, several of which Canadian Solar has in its development pipeline, and for small-scale domestic projects or mid-scale distributed generation. The second class of projects offer ideal opportunities for differentiation in company products that otherwise become commoditized – low-voltage solar panels with customized appearances could help Canadian Solar panels stand out from the competition.

In addition to a diversity of projects, the company is targeting a geographic diversity of markets, including the African and South American markets identified by a number of industry analysts and boosters as the next major markets for solar. The US and Canada continue to offer opportunities, King said, while in budget-crunch Europe the focus will be maintaining the market.

Key to growing the US market has been the participation of Chinese panel manufacturers and their contribution to cost compression. While that has driven a number of firms out of the business, and King warned more would follow, he also argued that the market would be half if its current size today in the US if panel prices had not dropped so dramatically in the past three years.

Grid parity with fossil fuels is already being hit in some areas where power is expensive, and solar will continue to emerge as a competitive source of generation as prices continue to slip – albeit more slowly – in 2012 and efficiencies increase.

Read more about solar grid parity here.

Slapping tariffs on Chinese panels is not going to help the market reach grid parity, King said, noting that the country is following historic precedent in moving toward increased consumption of the goods it has previously manufactured for export. In line with broader trends, China could consume more solar product output than the US in 2012, even as it remains a net exporter, King said.

Eyeing the broader solar market, which is in a widely discussed shakeout that has claimed high-profile victims in American manufacturing, King said that “once things begin to settle out, there will be survivors, and those survivors will be stronger.”