Solar Sector Heading for a Shakeout

Yes, the solar industry is just taking off. I agree is a guarantee that with the nest USA administration, whether McCain, Obama, or Clinton they all are more supportive of renewables. However, that doesn’t deny that the industry must go through a shakeout before reaching a

Seems like everyone’s jumping on the Jerome Ball bandwagon.  I don’t know how anyone can make reasonable predictions about Solar without including the Big Picture on Big Oil and Big Coal.  Forget, for sake of argument, that no one likes pollution—let’s just agree that people vote their wallets.  The reality, however, of near/mid term Oil supply is stark.  Just ask the recently retired CEO of Royal Dutch Shell (Jeroen van der Veer), or the recently retired head of exploration for Saudi Aramco (Dr. Sadad I. Al Husseini), or T. Boone Pickens (who needs no introduction).  Add into that mix the Bush Administration Oil Cartel—the Alternative Energy Anti-Christ—which has systematically cooked books and disinformed and crushed opponents over the last 7 critical years when everyone else in the World had already seen the light.  Think that might change with a new administration?  Even McCain?  And who amongst you has taken the time to look into the coal industry? (Reading Big Coal by Jeff Goodell would be a good start.)  Bottom line, pull your heads out of the silicon and look around around.  The Solar Rush is just at the starting line.

Yes, the solar rush is just beginning. The market is evolving from an embyonic stage to a commercial commoditized mass market. When this transition occurs, Geoffrey Moore argues the business model of companies in the industry must adapt to the changing needs of the customers. Usually crossing that competitive chasm means adoptiing new business level strategies. The companies who can do that well or profitably can remain in the market after the shakeout phase. Historically speaking this happens in all technology markets…check out Geoffrey Moore’s theories in market development to explain further….so basically though the solar rush is just beginning, it doesn’t mean all the companies currently involved will be able to remain in the competitive environment. Business is business and those companies which can either be cost leaders or differentiators or some hybrid of the two will succeed. However, I heard the CEO of Sunpower talking that lowest cost per watt is not the only criteria. When actually selling panels, the customer has limited space and needs the most energy from that space to more quickly reach payback. This means highest efficiency cells are important for the home rooftops market segment. SO it may not always be lowest cost per watt that sells the panels.

Installed cost/watt is the key metric.  Footprint is almost irrelevant if a panel cannot cost compete on a cost/watt basis.

<<<<When actually selling panels, the customer has limited space and needs the most energy from that space to more quickly reach payback.>>>>

The key point O’Rourke misses is this:  ONLY thin film can thrive as PV avg sales prices drop.  Thin film won’t just “survive” a shakeout, it will emerge as the dominant PV technology with spectacular margins and more than 7yrs of absolutely unlimited growth potential.

Thin film from FSLR, AMAT plants and CIGS co’s can still produce HUGE profit margins if ASP of PV drops to $1.75/watt next year—because production costs are between sub $1 to 1.25;

Thin film companies will not just survive as O’Rourke suggests, they will EXPLODE.  The comments of Stephen O’Rourke, and Deutsche Bank Securities demonstrate profound ignorance of the PV industry.