Only half of Germany’s 50 major solar energy companies will survive the accelerating price war in the photovoltaic industry, a market study compiled by consultants Roland Berger indicates.
Oversupply and cheaper production will force prices for PV products to drop by 15 percent per year until 2015. This combined with threat of low-cost competition from Asia, declining sales at home and a dwindling presence in the world’s growth markets, may make German firms offshore their production to low-cost regions or face bankruptcy. Though the German PV companies have excellent technological capabilities, they are properly prepared for the difficult market climate.
The study expects that only about half of Germany’s 50 or so larger solar power companies will survive in the next five years.
The German government this year agreed to reduce subsidies for rooftop panels by 16 percent. The decision helped the German industry to a sales boom, as private customers ordered panels in droves to beat feed-in-tariff reductions set for July. Sales dropped afterward, however, and many German firms are trying to enter emerging markets in North America, India and China to make up for lost business at home.
But will all them succeed? Highly unlikely. The study found that only six of the 16 largest German solar power companies have healthy finances and a strong strategic position when facing growing competition. The remaining firms are ill-prepared, mostly because they lack production size, market access and prestige. Small and medium-sized companies could suffer as the pressure to grow in production and sales increases.
This can lead to a phase of consolidation, partnerships to achieve critical mass.
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