Silveo entering the Solar Market

Amongst the solar carnage, a US solar startup is planning to increase the capacity of its solar panels. While established as well as new solar companies continue to die in droves, Silveo a company started by ex-Applied Materials executives is planning to increase capacity to meet the growing demand for its high efficiency solar products. Silveo reminds of one of another US solar panel startup Suniva which is using the same high efficiency crystalline solar panel technology to compete with Chinese low cost manufacturing. However the going will be extremely tough given that the best Chinese solar panel makers have cut costs by almost 50% in the last one year alone. The main reason for the decline of the US  solar companies has been the severe competition from the low cost Chinese Solar Industry.

Silveo is using a proprietary technology to produce solar panels using the same mainstream equipment. This helps it in managing the costs while at the same time differentiating from the competition. The company also had lower costs as it is manufacturing in China which helps in lowering the labor and material costs.

Challenges faced by Silveo

Despite being smart and copying the techniques of its competition (unlike failed companies like Solyndra which used custom equipment and US factories),  Silveo faces many challenges:

1) Scale – The company has a 32 MW capacity which is almost 50 times smaller than competitors like Yingli, Trina and others.

2) Brand – In these days of bankruptcy a day, brand and staying power has become very important as financial institutions are only willing to provide debt to solar systems using Tier 1 brands.

3) R&D – Investing money in R&D is very tough unless you have a big enough topline to support these costs. The days of VC millions are long gone with Solyndra and Abound Solar.

4) Finance – With solar industry having burned both public and private investors in the last couple of years, getting people to finance your expansion in solar has become almost impossible.

Summary

In the current scenario, I don’t think it is possible for a solar startup to survive unless it operates in a niche. Silveo unfortunately does not work in a niche but in the cut throat solar panel segment. Even the best and biggest solar companies like Trina, Jinko and Renesola are diversifying because its not possible to make money in the current over supplied market. For a 32 MW startup to be successful in the global setup that we have right now is impossible in my view. The best strategy for Silveo is to probably merge with a bigger player where it can leverage its technology. However even that will be difficult given the big daddies like Siemens and GE are abandoning their solar divisions.

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