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The Solar Panel Industry’s Ongoing Consolidation Process

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From 2009 to 2011 Suntech emulated success in the solar sector. The Chinese company doubled solar cell production to stand out among other industry leaders, meanwhile becoming one of the industry’s highest cost manufacturers.  $564 million in convertible debt was reported due on March 15, 2013, although the company has enough debt aside from this sum that put them at a debt to equity ratio of nearly 500%.

As we watch the sun set on Suntech by means of subsequent bankruptcy, it is becoming clearer how rapidly the world’s solar industry is consolidating. It is expected that, of the 120+ Solar Manufacturers operating in the world today, perhaps a mere 20 to 30 of them will survive the currently ongoing worldwide industry consolidation. Analysts have predicted that the coming year will face the first major consolidation in not only China’s solar sector, but the industry on a global scale as well. Christopher Blansett, an analyst for JP Morgan Securities LLC, has expressed his own theory regarding the reasoning behind the evident consolidation: “Weaker companies who did not get their product costs down to competitive levels are going to disappear…they’ll be bought up. They’ll go away. There is significantly more supply of solar modules than demand.”

While many ideas and arguments have circulated in regards to this issue, Blansett is not the only one standing by this theory of inadequate product costs and a lack of demand in comparison to production rates. Of course, before the industry can jumpstart the much needed recovery process,  it appears necessary for other bankrupt solar companies in China to sell off capital or merely go out of business.

Despite this, some industry leaders have found a way continue moving forward with confidence, ReneSola being a key player.  By capitalizing on proprietary technologies, economies of scale and low-cost production capabilities, ReneSola has continued to efficiently contribute to China’s transformation from a manufacturing marketplace to a critical consumer hub for solar products. As for the apparent consolidation of the industry, it is difficult to truly determine which solar companies will prevail. However, one certainty that remains is that in a world that seems to be overflowing with this commodity product, ReneSola’s success in product differentiation, product quality, design development for improved efficiency, and low-cost manufacturing strategies are setting it apart from the rest.

Image courtesy of telegraph.co.uk.