Thin-film solar manufacturers are prepared to endure hard times better than traditional solar companies in the next few years, Stephen O'Rourke, managing director for Deutsche Bank Securities, said at a Greentech Media conference in Massachusetts on Wednesday.
While not everyone agrees, a number of analysts have been predicting a solar-industry shakeout starting anywhere from this year to five years from now as the silicon shortage ends and the solar industry finds itself with an oversupply of panels (see Solar Sector Heading for a Shakeout, Silicon Still a Hot Topic at Photon and Solar Margins About to Shrink?).
But not every solar manufacturer is expected to experience great hardship as a result, especially if the company makes thin-film solar cells, O'Rourke said.
O'Rourke, who forecasts a three- to four-year shakeout starting in the middle of 2009, claims that companies that make thin-film solar, which uses little or no silicon, won't have it nearly as bad as those manufacturing traditional, silicon-based solar technology.
Part of the reason is that thin films are dominated by a few key players, and the largest -- Wall Street darling First Solar -- already has locked in contracts for virtually all of its capacity for the next five years, he said.
First Solar, which already has one of the lowest costs in the industry at $1.10 per watt, expects to be able to compete with lower prices in the future. It already has set contracts with steadily declining prices through 2012, said Jeff Osborne, a managing director of research for Thomas Weisel Partners. The pricing pressure will result in even greater development of low-cost solutions, which today are thin-film-based, Osborne said.
But that doesn't mean thin-film companies will be able to avoid the shakeout entirely, O'Rourke said.
"Fundamentally, it will impact stocks," he said, adding that thin-film companies will not be immune from the solar industry's overall experience.
Still, O'Rourke said he doesn't expect to see demand for thin-film solar to fall.
The greater threat to thin film's future is the inability of some startups to prove their technologies work, Osborne said.
Of more than 80 thin-film startups, he said, more than half are what he calls "PowerPoint companies."
Without products or any real proof that their technologies work in the real world, Osborne speculates that as many as half of these companies could fail.