Most people predicted the recession would speed up the shake out in solar – they were right.
The latest company to announce a major shift in business strategy is GE Energy, which announced that it would close a 35-MW capacity solar module manufacturing plant in Delaware. It didn't really come as a surprise to many in the industry, considering that GE has been laying off solar workers for some time. But the plant closure does highlight some interesting trends that are taking place today.
The first is the direct impact of the recession. Global demand for solar slowed this year, which meant that inventory piled up world-wide. When prices dropped by 30 percent, manufacturers couldn't lower their costs at the same pace. It just didn't make sense for GE to keep the plant open. ::continue::
Secondly, many companies are realizing that solar is no longer a curiousity. In order to keep up with rapidly changing technologies and market conditions, companies like GE will need to put a lot more money behind solar. Otherwise, they'll get whipped by global, pure-play manufacturers. The equipment in the GE manufacturing facility was more than 5 years old – that's ancient these days. Rather than spend money to overhaul a small facility, GE decided it was better to simply shut it down.
According to Shyam Mehta, a senior analyst with GTM Research, Companies like GE have been “forced into an expand or die mentality.” The tough market has given smaller manufacturers a chance to evaluate the viability of their facilities and “on the whole, they've decided that wasn't a good idea for them.”
GE will continue to invest in PrimeStar Solar, a start-up company developing cadmium telluride thin film modules. However, GE will be moving away from manufacturing for now – leaving that up to better-established players.
BP made a similar decision this April, when it announced that it would close plants in Maryland and Madrid and focus instead on sourcing products from Chinese suppliers. Then in June, Schott Solar decided to close a plant in Massachusetts and move operations to a bigger, more high-tech facility in New Mexico. And finally, last week, Evergreen Solar said it would move its module assembly from Massachusetts to China.
Some of the smaller players may be closing down or restructuring, but that doesn't mean that solar manufacturing is dwindling in the U.S. In recent months, we've seen announcements from SMA, SolarWorld, Sanyo and Suntech about moving into the U.S, or expanding operations in the country.
“If you put all the pieces together...what it really reflects is a changing of the old guard,” says GTM's Mehta. “You have a cleansing effect...any growth in the U.S. will come from the addition of new facilities by globally established manufacturers.”
This is a sign of increasing maturity. It means that solar is no longer a side project – in order to make it in this business, you have to invest some serious money. And companies like BP and GE have found that it's better to leave solar to the solar companies.
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