Lux predicts solar-market turnaround

June 3, 2013 | By Barbara Vergetis Lundin

The solar market has changed drastically very quickly. Growing pains have scared many investors away, but the positive outlook on the health of market and industry players will bring many back into the game, according to Lux Research.

Over the past two years, overcapacity and poor margins have bankrupted a multitude of solar suppliers and forced corporate investors out of the market. Lux Research notes that the industry is set to recover quickly thanks to converging supply and demand.

The industry's turnaround comes as a result of multiple factors. First, oversupply will plummet in 2015, allowing for margins to recover.

"Thanks to the bankruptcies of uncompetitive players, and underlying financial constraints preventing capacity expansion, overall module capacity will decrease to 58 GW in 2015," Lux Research said. "Meanwhile, the growth of new markets like China will lead to global demand growth from 31 GW in 2012 to 52 GW in 2015. In combination, these will lead to module oversupply of only 12 percent, down from 100 percent in 2012."

As a result, module margins will recover up to 10 percent from their near-zero averages.

Second, corporate thought leaders are making moves to enter or re-enter the market by leveraging existing technologies or market platforms, including huge acquisitions and strategic partnerships, which will drive up the cost of entry, according to the research.

Finally, stakeholders are ensuring their positions in the market for the long-term by investing in technologies to increase performance, lower costs, improve product quality, and enable new features. Areas of investment range from high-efficiency crystalline silicon cell to hybrid photovoltaic/thermal cogeneration systems to coatings for higher-quality, longer-lasting modules -- a major focus in light of recent allegations of defective products, Lux says.

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Related Article:
2013 Solar Outlook

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