In its latest report, "Solar industry: Survival of the fittest in a fiercely competitive marketplace", Bank Sarasin has identified the expected winners and losers of the solar industry shakeout, which has been accelerated this year, due to regulatory changes, weakened demand and freefalling prices.
As Sarasins study authors highlight, those companies which are internationally active and vertically integrated will have the highest chances of pulling through the weak market conditions, in addition to those which offer solar modules in combination with other products and services.
These predicitions were echoed by BHF Banks Goetz Fischbeck, who, following the 12 Forum Solarpraxis, wrote that due to the "excessive" production capacities across the entire photovoltaic manufacturing chain, the key to survival will be a strong balance sheet and adequate financing over the next two years.
On the other hand, continues Bank Sarasin, companies which are "small", "uncompetitive" and "inadequately financed" will be pulled under. The companies it believes to be most under threat are small to medium in size, and with "comparatively modest growth prospects, such as Germany’s Conergy, Q-Cells, Solar-Fabrik and Sunways."
"A shakeout of the solar industry is inevitable as the imbalance between production capacities and demand has become too great with around 50 gigawatts (GW) of production capacity for solar modules compared with sales of 21 GW at the end of this year," wrote Bank Sarasin in a statement released.
The thin film manufacturers are also not immune to the solar shakeout. Bank Sarasin says that compared to 2010, which saw 150 active thin film companies, there are now 100 operating in the industry.
It adds that by 2013, the top companies, will have minimum manufacturing capacities of 500 megawatts (MW). Economies of scale, low cost and bankability are the crucial factors for success.
In terms of specific players, the bank identifies First Solar, Sharp, ShowaShell, GE and Hanergy as the "front runners", which should be able to achieve average annual growth rates of 32 percent up to 2013.
Similar to IMS Research, which predicts that 24 GW of newly installed photovoltaic capacity will be added to the global grid this year, Bank Sarasin estimates that 21 GW will be reached, thus taking cumulative installed capacity to over 60 GW.
In 2012, 20 percent growth on 2011 can be expected, on the back of increased activity in the U.S., China and Japan. However, the global market is expected to go through a "difficult transitional phase, particularly in Europe".
This European sentiment was echoed by Fischbeck, who reported at the Forum Solarpraxis that the main consensus from participants was that the key European markets Germany, Italy and France will see installations on a level "significantly lower" to that of 2011.
He added that while it is anticipated that Germany will install five GWp this year, this figure will drop to between three and four GWp in 2012. Italy, which has seen predictions of 6.8 GWp of new capacity in 2011, is only predicted to install between one and 2.5 GWp next year. Lastly, says Fischbeck, France will drop off to about 500 to 600 MWp in 2012, down from a gigawatt market this year.
Looking ahead, Bank Sarasin says that between 2010 and 2015, newly installed photovoltaic capacity will grow, on average, by 18 percent globally each year. It has identified India as the strongest growth market, growing at a rate of 101 percent annually during this period. Europe, on the other hand, is forecast to decline by three percent annually.
"By 2013, more than 10 PV markets will each achieve an annual installed capacity of 500 megawatts (MW). PV markets will not only become more diversified in geographic terms but also in terms of the different applications for solar installations," concludes Bank Sarasin.