Solar-panel makers in China will increase their market share as overcapacity and falling prices force weaker foreign competitors to seek takeovers or go out of business, Standard & Poor’s forecast.
Chinese producers including Yingli Green Energy Holding Co. and Trina Solar Ltd. (TSL) that benefit from government support are driving down the price of photovoltaic panels even as it crimps their profit margins to pressure European rivals that face higher costs, credit analyst Swami Venkataraman said in a research report.
“China has become the dominant producer,” Venkataraman said. “The exit of high-cost, stand-alone panel manufacturers will become inevitable in the next few years unless an explosion in demand allows all producers to thrive.”
First Solar Inc. (FSLR), based in Tempe, Arizona, is likely to remain the market leader because its cadmium telluride generators cost at least 30 percent less to produce than the polysilicon panels made in China, Venkataraman said.
“Even if poly prices were to fall significantly below the current spot price of about $50 per kilogram ($22.70 a pound), First Solar would still have a significant edge over the lowest- cost Chinese players,” he said.
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