Solar-energy equipment makers are being hurt by falling profit margins and excess factory capacity that will “crowd out” marginal players in favor of large, low- cost Chinese companies, Moody’s Investors Service said.
“Despite the sector’s favorable long-term outlook, the pullback of government incentives in Europe, by far the world’s largest market, will cut demand and exacerbate global overcapacity,” Chris Park, a Hong Kong-based analyst, said today in a report. New factories, particularly in China, are bringing down product prices and margins, he said.
While Park didn’t name companies that may prosper more than others, he listed Jiangsu, China-based Suntech Power Holdings Co. as the world’s largest solar-panel producer and GCL-Poly Energy Holdings Ltd. (3800) of Hong Kong was ranked No. 1 among solar- wafer manufacturers.
The global production capacity of photovoltaic plants jumped 139 percent to 18.2 gigawatts in 2010 as a projected reduction of subsidies this year in Germany, Italy, and the Czech Republic contributed to last year’s rapid growth. Subsidies enabled these three nations to account for 70 percent of the world’s photovoltaic demand, Moody’s said.
“The continued growth of photovoltaic solar demand over the medium term depends on government subsidies and incentives, which have declined in Europe,” Park said. “A low cost base, increasing scale, and vertical integration make Chinese companies able to better withstand the shake-out and gain market share.”
