The Dying Solar Industry
The massive losses seen by the Solar industry has been an ongoing feature for the last couple of years and given that local governments continue to support bankrupt Chinese solar players (Suntech, LDK) even the future looks dim. There have been literally hundreds of solar bankruptcies as a boom in the last 3-4 years attracted companies from around the globe. Global industrial conglomerates like GE, Siemens, Areva, Hyundai etc. had joined the solar party by investing in solar and announcing big expansion plans. However the massive Chinese overcapacity (estimated to be around 200% of the global demand) has bankrupted most of the European and USA companies. Except for a few, western solar manufacturers are going to shut down in the next couple of years. Already consolidation is going on, with big Asian companies buying western solar companies for a pittance.
Siemens $400 million Solar Thermal Energy Solel Energy Acquisition goes Waste
Siemens had made a big bang entry into Solar Energy acquiring the leading Israeli company Solel Energy for $418 million. However Siemens like GE has never been able to replicate their wind energy turbine business success in solar energy. Siemens never won big solar thermal orders and now solar thermal technology is facing survival questions as solar PV technology has left other solar technologies far behind. It looks difficult for Siemens to get buyer for a technology which has been abandoned by even the pure play companies like Solar Millenium.
Korean chaebols like Samsung, Hyundai and LG have sharply scaled down their solar ambitions as the glut takes a huge toll on profits. Siemens which is the world’s largest green company has been facing a slowdown in revenues and profits in recent time as the whole green industry is suffering from overcapacity (wind, LED, solar). Now the company plans to completely get out of solar by selling its solar thermal business to a third party. Note GE which had announced a solar thin film panel factory with much fanfare too has put its solar energy plans on the backburner. Expect the rest of the electrical giants too, to abandon their solar power plans as well.
Other MNCs which diversified into Solar Energy
Asian conglomerates and semiconductor companies have been the most aggressive in entering this area. Chemical companies too have shown interest in building polysilicon plants which build on their core competence. Others have entered the Solar Thermal Energy Field which reinforces their traditional strengths in building power plants and EPC work. Here is list of the top non-solar companies entering the solar sector:
1) Samsung - Semiconductor and Electronics Giant Samsung is entering into production of polysilicon setting up a 10,000 ton plant in an equal JV with US Poly Producer MEMC. The plant will be set up in South Korea and will go onstream by 2013. Samsung had recently started production solar crystalline silicon solar panels which uses polysilicon as raw material. Samsung has made major plans to enter the Green Industry in a big way. It has signed a multi billion investment contract to build a huge offshore wind farm off Ontario and also plans to build solar plants.
2) LG – LG, the other big Korean Electronics Giant has also firmed up its plan in the Solar Energy Space. It is already selling solar modules in the South Korean and European markets and plans to have a 240 MW capacity by 2010 end. This will be rapidly expanded to a Gigawatt capacity by 2012.
3) Hanwha - South Korean Conglomerate Hanwha subsidiary Hanwha Chemicals took a controlling 49.99% stake inSolarfun. Solarfun is the 4th largest Chinese company which has been executing well on a vertical integration strategy. The company has 900 MW of module capacity with ~400-500 MW of wafer and cell capacity. Hanwha is also expanding into the polysilicon and system integration business.
4) Saint Gobain - Global Glass Giant Saint Gobain is expanded its presence in the Solar Energy Manufacturing by partnering with Hyundai Heavy Industries to build a CIGs plant in South Korea with a $198 mm investment. The 50:50 JV known as Hyundai Avancis is situated in South Korea. Saint Gobain like Semiconductor Giant TSMC is betting on Copper Indium Gallium Selenium (CIGs) Technology rather than the mainstream crystalline silicon technology. CIGs is getting the most significant investments these days compared to other thin film technology. Saint Gobain is already a big player in the solar market as it suppliers glass to a lot of solar companies for their modules. Getting into panel manufacturing will further allow it to get a foothold of this new potentially giant industry. Du Pont, Dow Chemicals, Corning all have considerable presence in the solar equipment market as well.
5) Hyundai Heavy Industries - South Korea’s Hyundai Industries which is known more for its cars, is also making a big push into the Green Energy Space. Like its South Korean peers, Hyundai is also preferring to enter this space through Solar Energy. Hyundai has already established a 320 MW cell capacity which it plans to double to 600 MW by early 2011 which would make it the largest South Korean manufacturer. Hyundai had earlier bought solar cell equipment from Germany’s Centrotherm as far back as 2008 and had entered a long term contract with LDK Solar for buying solar wafers as raw material for its cell lines. Its sister company KCC has started a 6000 ton polysilicon plant in South Korea. It is in negotiations with the Hungarian government to set up a manufacturing base in that country to serve the European markets. It is also targeting the US market with partnerships with companies like Raser Technology and Matinee Energy. It is also planning to set up a 240 MW solar power plant in partnership with Matinee Energy and LG.
6) TSMC - TSMC has been a late entrant into the solar energy market but is making much smarter moves than its Taiwanese peers. It bought a 20% stake in Motech (Taiwan’s oldest and largest solar cell company) for $192 million. It bought this stake at an opportune time when the stock prices of solar companies are trading at trough valuations. Its $50 million stake buy in Khosla backed unlisted CIGS startup Stion is another smart investment. Stion is looking to partner with major semi companies for manufacturing and TSMC which is the world’s largest foundry is an ideal partner.
7) AUO – AUO is one of the world’s leading LCD panel manufacturers with most of its manufacturing facilities located in Taiwan. AUO has a JV with SunPower’s to build 1.4 gigawatt third solar cell fabrication facility in Malaysia. SunPower and AUO will equally own the JV and contribute equal capital funding. AUO is also building cell and module plants in Taiwan as well. It recently claimed the world’s most efficient solar panel with 19.5% efficiency. AUO has also bought M.Setek a large producer of polysilicon and wafer making it a vertically integrated player in a short time.
8)POSCO - Posco, one of world’s largest steel producers has been trying to enter the solar market like its other Korean brethren. Posco’s energy unit is planning to set up a massive 300 MW Solar Plant in the USA along with a US Developer Sustainable Energy Capital Partners (SECP). Note LG had earlier also said that it was planning to set up a huge solar plant in the USA.
9)Honda – Honda, the Japanese auto giant has also joined the Solar Energy Race by selling Thin Film Modules based on CIGs technology. Japan’s conglomerates like Sharp, Kyocera, Mitsubishi and Panasonic already have big solar manufacturing operations with Sharp being the largest Solar Company in the World.
10) Siemens – The world’s largest green company is quite weak in the Solar Energy area. Like other conglomerates and competitor Areva, it acquired Israeli CSP company Solel Energy to make its foray into the Solar Thermal Energy sector. The company is looking to expand in India where the JNNSM has given equal importance to Solar Thermal Technology.
11) Areva - Giant Global Electrical Equipment Conglomerate which entered the Solar Thermal Energy area by acquiring a struggling CSP startup Ausra. The company is planning like the others to make a major investment of around $3 billion to build 1000 MW capacity in India. The company is the biggest nuclear equipment supplier in the world and has interests in biomass energy as well.
12) General Electric(GE) - GE is the most profitable large Wind Equipment Manufacturer in the world and the undisputed king of the USA market. GE has invested in a Cadmium Tellurium Startup Prime Solar which is ramping up production. Note Cd-Te is the same technology which is used by First Solar. GE has also tied up with Japanese Solar Frontier to market its CIGs based modules. Note Solar Frontier or Showa Shell is building a massive 900 MW plant in Japan. GE is offering an integrated solution comprising of modules, inverters, services and other BOS equipment to get a leg up on competition.
13) Toshiba - Toshiba the Japanese Giant known for its Global Leadership in Nuclear Power Equipment, Electronics and Memory Businesses has decided to become a big player in the Solar EPC business. This strategy is quite different from the other global conglomerates entering the Solar Energy Field. It is already in the process of building a 10 MW plant in Bulgaria and plans to generate around $2 Billion Dollars annually from US and Europe by 2015.
There are a number of other companies which are getting into into solar energy mostly from Taiwan like Delta Electronics, UMC, Chi-Mei, Flextronics and others. Japanese companies like Sharp, Kyocera, Panasonic, Mitsubishi have been big players in the solar energy for a long time before losing their way to aggressive Chinese and Taiwanese companies. Other companies are National Semi, Micron, Intel.
“Siemens intends to focus its renewable energy activities on wind and hydro power,” the engineering conglomerate said in a statement on Monday.
Siemens said this month it aims to slash production costs and could cut jobs to compete with its rivals as business this year is proving tougher than it had expected.
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