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October 17, 2012Spanish Wind Turbine Producer Gamesa is drowning in red ink like other major wind energy equipment companies Vestas, Suzlon and Sinovel. The prospects of wind industry are not good with major overcapacity and saturated Chinese and western markets offering little hope of revival. Spain is having difficulties with its fiscal deficit and finding it hard to sustain subsidies for Renewable Energy. The Markets in the West have also saturated themselves in terms of growth rates. Though low cost South Korean and Chinese Wind Turbine Producers have not penetrated the Western Markets yet, they could do so in the future.
Gamesa which is a Top 5 Wind Energy Company has faced turbulent times with the owners selling stakes and the share price taking a huge dive. Gamesa is looking to restructure its operations and concentrating on the offshore wind market by focusing on higher megawatt turbines. But this is a long term plan with 2020 set as the target for the complete development of this new Turbine. Meanwhile Gamesa has become the target of takeover speculation by one of the bigger Chinese Wind Turbine players like Sinovel, Goldwind etc.
Read more about Wind Power ETFs
Gamesa Forays into Solar Inverters
Gamesa is now turning to other energy and electrical markets to generate profits as it looks to ride over the tough times. The company is looking to provide electrical solutions to hydro, nuclear energy industry as well as the booming solar industry. The company plans to launch a utility grade solar inverter in the 1 MW range next year. Note the company is already involved in the installation of solar plants and has experience with central inverters used in large scale solar farms. However solar inverters have become a competitive sector as well with even the largest solar inverter company, SMA Solar seeing rapid declines in revenues and margins due to the entry of low cost Chinese solar inverter companies. Besides, other industrial conglomerates like Schnieder, GE and Siemens already have a solar inverter product line. So it remains to be seen how much money Gamesa can make from its solar inverter foray.
Why SMA Solar is Losing Marketshare
SMA Solar, the biggest German Solar Energy company is now losing marketshare to the new solar inverter manufacturers in USA and China. Note SMA Solar held a dominating 40% solar inverter global marketshare in 2010 compared to the solar panel manufacturers none of which has managed more than a 10% marketshare. SMA Solar however is now feeling the heat of the competition as solar energy prices continue to go down steadily. The pressure on the solar inverter companies has been increasing as solar inverter prices as a percentage of the total solar system cost has risen from 5% to almost 10% now, as solar panel prices have come down much more rapidly.
Chinese solar inverter makers are also selling photovoltaic inverters at almost 30-40% discount over the Western producers. Though the quality of the Chinese made inverters is lower they are slowly improving it and the price differential is quite huge. Also with the Chinese solar domestic market set to become one of the world’s biggest in 2012, the Chinese solar inverter companies will capture a massive chunk of global marketshare given that foreign companies have a tough time in competing in China.
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