Solar Power Sector

Here Comes the Sun! – An Overview of the Solar Power Sector

09/09/2013 | Author / Editor: Erika Velazquez / Dominik Stephan

Solar energy is positioned to become a new source of power to lead the world to a low-carbon futur (Picture: ABB)

Renewable energy, in particular, solar power has been in the news for various reasons. The overall feasibility of its incorporation to its advantages cannot be ignored. Here’s a look at the current slump in the industry and why it will shortly see a turn around.

Solar has a bright future ahead. It wouldn’t be surprising if this statement raises an eyebrow or two. The solar industry is rumoured to be going through a tough time, with high-profile bankruptcies, trade wars and incentive cuts being the order of the day. And if that wasn’t bad enough, there is a common myth that solar energy is still very expensive and will never be competitive with other renewables such as wind, much less against conventional, fossil-fuel based power generation.

A Bit of History – The Rise (and Fall?) of Solar Power

For sure, the solar industry is in a state of flux. Since 2011, it has simultaneously faced module manufacturing oversupply and weakening demand stemming partly from reduced incentives and typically feedin–tariffs in European markets in an attempt to curb budget deficits. The result has been plummeting prices for photovoltaic (PV) modules, vanishing margins and losses among players in the upstream part of the PV value chain, i.e. wafer, cell and module manufacturers.

Pricing pressures have also cascaded downstream to equipment suppliers and system integrators. From a technology perspective, the collateral damage came in the form of reduced competitiveness of emerging solar technologies such as CSP or CPV against PV. Although both are viable, their economic advantages were reduced dramatically as PV system prices dropped.

What is the 'Solar Shakeout'?

The term ‘solar shakeout’ has been used in the media to describe current market conditions: Relentless industry consolidation in the form of defaults or shifts in market strategy. As noted in this article however, shakeouts are a natural and healthy phase of industry evolution and growth. And growth is precisely one of the key reasons why we see sunnier days ahead.