Recent events in the photovoltaic industry regarding the financial conditions of most manufacturers should cause concern among consumers. The cost per watt has been falling over the last six months and now its effect has started to be realized. What has been good for the customer has not been good for manufacturers as sales have decreased and profitability has evaporated for almost everyone. Anyone who has been an investor in the stock of solar companies can attest to the collapse of the value of his or her investment.
Pacific Islands Construction believes that consumers should be made aware of how these developments may affect them and what they should consider prior to purchasing their PV system. Just this past week, the CEO of Trina, one of the world’s largest solar module manufacturers, predicted that only about five companies in the photovoltaic module manufacturing business may still be around in 2020.
Manufacturers have slashed sales forecasts and U.S. companies like Sunpower and First Solar have said they will reorganize. Mergers have started to increase and banks have become leery of making loans to many of the solar companies because of their highly leveraged positions or future profitability.
Why has this happened and what does it mean? As China has ramped up its production capacity in recent years, the latest world events caused many subsidies to disappear. Spot price for solar modules dropped by more than 40 percent and all profitability went with it. As consumers have reaped the benefits, solar manufacturers have reacted in the following ways:
At first they dropped prices, then they looked to cut costs, and finally many have started to make cuts on the quality of the product they are producing.
The cutting of quality by using inferior components may be the only way many companies feel they can stay in business. Smart large-scale buyers are now seeking out suppliers who they feel will not sacrifice quality and will stay in business. The largest six suppliers now are receiving more than 50 percent of the business and this means the other couple hundred manufacturers are getting the rest.
The recipe for bankruptcy, mergers and consolidation have rapidly come into being. Name-brand manufacturers will decide to get out of this business and focus on their traditional business. The sad thing about this is that many consumers have bought their PV system based on their familiarity with these name-brands.
The future of solar is bright, but the industry has a bumpy road going forward and the value of warranties comes into question. Predicting how things will go forward is a guess, but purchasing quality equipment with the proper installation will help alleviate problems down the road. Trust in the company one chooses to do business with cannot be based solely on price if a careful analysis of the products is not performed as current conditions dictate.
Pacific Islands Construction has carefully selected its PV partners from only the best quality manufacturers, whose financial strength has not been impacted by current market conditions. We continue to believe that what is best for our customers is what is best for us. We will continue to be vigilant in order to provide the best quality from manufacturers whom we believe will be in business tomorrow.
To learn more about photovoltaic or hot water systems, call 841-7756 or visit the website pacificislandsconstruction.net.