A consolidation of the solar photovoltaic (pv) industry has long been predicted. However, unlike other industries like the pc industry or the telecommunications industry before, the consolidation in the pv industry appears to happen thru shutdowns and bankrupties rather than mergers. Three thin-film based U.S. module manufacturers became insolvent in 2011: Evergreen Solar, Spectra Watt and Solyndra, while Solon ceased manufacturing in Arizona. In Germany, Conergy has suspended cell production and been taken over by its creditors. In fact, the failure of Solyndra is perhaps the most spectacular venture captial- backed bankruptcy of all times with $1bn VC investment and also a $535m loan from the U.S. government. On the other hand, we haven’t seen any spectacular mergers of the likes of HP-Compaq or Vodafone-Mannesmann in other industries.
The reason for this is: There is no real driver for mergers in pv manufacturing. Firstly, mergers are very expensive and can only be justified if there are synergies. In pv, this can be difficult, as technologies of two manufacturers are likely to be so different that these synergies would be marginal. Secondly, as the demand curve for modules is so super-elastic, manufacturers need to maintain over-capacity so that they can adjust supply quickly. Hence, no mergers where value would come from the rationalisation of production facilities.
On the other hand, that massive over-capacity is creating an industry that is increasingly competing on price alone, forcing companies to shut down production that have no cost advantage.
In the end, we will see fewer technologies and a move to low-cost regions for manufacturing.