Apr 17 - McClatchy-Tribune Regional News - Tracy Seipel San Jose Mercury News, Calif.


The current downturn in the solar industry will make it stronger by winnowing out the weakest players, a market research firm said Friday.

"For years, the PV (photovoltaic) industry enjoyed vigorous double-digit annual growth in the 40 percent range, spurring a wild-West mentality among market participants," Henning Wicht, senior director and principal analyst for iSuppli, said in a report.

"An ever-rising flood of market participants attempted to capitalize on this growth," he added, which led to overproduction at a time of declining demand.

Wicht said the biggest reason for this year's slowdown was a huge drop in expected solar installations in Spain. That country accounted for 50 percent of worldwide installations in 2008.

Beyond Spain, he said, the solar market also is being hurt by the global credit crunch.

Wicht said worldwide solar installations this year will be down 32 percent from 2008. Global revenue will drop by 40 percent to $18.2 billion, down from $31 billion, he said.

But much like the PC shakeout in the mid-1980s, the solar downturn will lead to a better balance between supply and demand, Wicht said.

For all the bad news, Wicht believes the "fundamental drivers" of solar growth -- including government incentives, tax breaks and cost reductions -- will help the solar market rebound in 2010, and post a 58 percent increase in revenue in 2011. He predicts similar growth rates in 2012 and

2013.

Craig Irwin, an energy analyst with Merriman Curhan Ford in San Francisco, agrees the current slowdown in the solar industry "will filter out the most innovative companies and really help promote the next generation of leaders" to produce lower cost solar technologies.

"As the economic equation is really squeezed, people want to see better performing (solar) panels and lower costs," he said.

Irwin cited Fremont-based Solyndra as a company he believes has some "very interesting technologies that could allow a real breakthrough around cost and efficiency."

Ron Kenedi, vice president of Sharp Solar Energy Solutions, thinks the solar industry may rebound quickly.

"All businesses are in a tunnel," Kenedi said. "The difference is that we have a light at the end of our tunnel in solar because we have the stimulus package. There's a lot of dedicated time directed at growing green jobs and renewable power industries, and solar can take advantage of those areas."

Contact Tracy Seipel at tseipel@mercurynews.com or 408-920-5343.

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