The squeeze is on…

Look at the latest pricing report from Solarbuzz and you’ll see that the pricing squeeze continues, although the pace has somewhat lessened. I suspect this is more due to a “breather” than anything else. We’re all expecting yet higher prices for silicon feedstock for 2006 and that will drive prices higher as well.
Will the growth in solar be stumped due to a few dollars higher price? I doubt that. We are caught between wanting to grow our consumer base through price drops and higher value. Yet despite the price of solar going up in the past year by over 4% at the retail level (industry average), sales have skyrocketed.
Those that are squeezed are therefore in the middle of the value-chain. If you don’t make your own solar cells, you are surely feeling a margin pinch. Thin-film solar cells have not increased as much and are slated to begin mass production by a number of new players. In my humble opinion, the only sport in which it pays to be thicker is sumo wrestling! This explains the rush to thin-film production by such “thick film” veterans like Sharp Japan. New players with exotic thin film materials are bringing manufacturing capacity on board at current market prices very shortly. Their capacity will be limited at first but is due to rise significantly in the first quarter of 2006. How many technology industries do you know in which the cost of the same component goes up?
Retailers will push back on price increases, yet there will be no avoiding “some” pain. I suspect they are aware that they are playing in a commodity market which is out of stock for a good year to go, until such time as new capacity comes on board. So consumers will bear little brunt and those in the middle, well I simply suggest you “think lean”. Put your company on a diet and consider how you can bring added value to add margins to your bottom line, or else be prepared to face a disappearing “bottom”…
Cofion cynnes (“yours” in Welsh..for my Bridgend/Wales team),

1 Comment

Leave a Reply

Your email address will not be published. Required fields are marked *