Marken (bzw nicht Lowcost) Solarmanufakturer
2009/10 das Geschaeft machten:
Bankability: The Missing Piece
So the question remains: why do installers and developers continue to purchase modules from high-cost producers (thus enabling the continuation of status quo business models) when there is an abundance of less expensive options on the market? And why do we keep hearing about the global market being in a state of module undersupply right now when available supply still exceeds demand?
The answer lies in the much-discussed but seldom explicated notion of bankability as it applies to module vendors. In a post-Lehman world, lenders have become extremely selective about which projects they choose to finance; the projects that receive capital are those with the lowest perceived risk profiles. Since the cost of debt is fixed, there is little upside for a bank if cheaper (and thus higher-return-enabling) modules are used, as long as the project clears its hurdle rate. This means only established firms with proven technologies and long-term product performance (i.e., module yields) will make the cut from the abundance of available options. It comes down to this: each lender has a relatively small, carefully chosen list of module vendors it is willing to finance (perhaps 100 in Europe, and as few as 10 in the U.S.). Unsurprisingly, almost every European crystalline silicon-based producer is on the list. Very few Asian and thin film firms currently are.
The effects are easy to understand. Essentially, the bankability factor has restricted the field of available producers to a much smaller pool; those firms that are not considered bankable are effectively shut out of the market. Indeed, this is exactly why the current market is considered to be undersupplied: as shown below, there is no shortage of module capacity, but rather of bankable module capacity. Bankability is the missing piece of the puzzle, and combined with Germany's ability to absorb high-cost modules, it is what has thus far insulated established, high-cost manufacturers from the twin effects of oversupply and commoditization.
2011: The Return of the Shakeout
This is the reality in which we find ourselves today. The lingering question, then, is to what extent this state of affairs is sustainable.
Can Germany continue to prop up high-cost manufacturers? Judging from the slew of FIT cuts that is on the way, decidedly not. After the usual mind-numbing speculation, it has been decided that tariffs will be retroactively cut by eight percent to 13 percent in July, followed by an additional across-the-board cut of three percent in October. As if this wasn't enough, there will be another reduction of 12 percent to 13 percent at the beginning of 2011. It is difficult to believe that most producers will be able to reduce costs in line with the net reductions slated to go into effect between now and Q1 2011, and consequently, that projects using high-cost modules will be viable. Also, there will be limited room for margin reduction on the BOS and project development side; they will have been squeezed tightly enough by then. And given that 2010 installations in the country will be around twice the 3-to-4-GW range policymakers have targeted, it wouldn't be surprising if more mid-year cuts were announced in 2011, as well. Thus, high-cost manufacturers will no longer be able to depend on spillover from robust German demand as in 2009 and 2010.
Is there another large market with the potential to serve as a refuge for high-cost manufacturers in 2011? In other words, if Germany is headed toward becoming the new Spain, who can be the new Germany? In its capacity to single-handedly rescue the industry, Germany stands alone in possessing that rare combination of qualities -- an uncapped market, generous subsidies, and short project-cycle times. Italy and the U.S. are the strongest candidates, but the former has laboriously long cycle times and is itself headed for a 20 percent reduction in subsidies next year (and counterintuitively, actually experiences lower module prices than Germany), while the latter is an intensely competitive, price-sensitive market.
What of the bankability factor? Could that still save the day and maintain the status quo as it pertains to the state of the PV market? Well, there are three things to consider here. First, 2010 will witness a huge jump in bankable, low-cost Chinese crystalline silicon manufacturing capacity, to the tune of over 4 GW. To the extent that this capacity needs to be utilized in 2011, we could see even larger price drops than subsidy cuts will dictate. Secondly, bankability (or rather, lack thereof) is not a permanent, everlasting condition: over time, an increasing number of companies currently on the wrong side of that line, both c-Si and thin film, will be able to alleviate concerns of risk surrounding their balance sheets and products. And thirdly, bankability doesn't really matter if you can't drive the desired return.
In summary, the unrelenting, prolonged shakeout that was originally predicted for 2009 seems increasingly likely to manifest itself beginning in early 2011. All signs point to a period of severe upheaval (i.e., restructurings, acquisitions, insolvencies) for high-cost manufacturers; unlike in 2009, however, there will be no Germany to step in, and no quick respite or return to the status quo. To survive, these firms will have to undergo significant transformation as far as their business models are concerned. Those that resist change will likely be pushed out of the market -- and this time, there will be no turning back. The next logical question is what exactly these firms can do to ensure their survival, but that's a topic for another day. For now, just don't say you weren't warned -- twice.
http://seekingalpha.com/article/...of-the-solar-shakeout?source=yahoo
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