Solars May Soon See Major Shift in Demand (TAN)
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Price: $8.49 +0.24%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 1.1%
EPS Growth %: +243.5%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 1.1%
EPS Growth %: +243.5%
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Solar stocks are about to see somewhat of a paradigm shift.
With high photovoltaic prices recently curbing enthusiasm for solar installations, market-research firm IHS (NYSE: IHS) sees crystalline silicon (c-Si) modules dropping to $1 per watt by the first-quarter of FY12.
The price level might increase demand for installations moving forward as price levels will now balance potential cost savings for corporations and countries.
Recently, spot prices from top Chinese brands were at $1.49 per watt for mainstream c-Si modules. At the end of the recent Intersolar convention, those prices had dropped to about 1.30 per watt, according to IHS.
Still, while gross margins are about 10 to 12 percent in the current quarter, along with price drops come a pinch of those margins. Intense competition in the sector will bring margins to a range of 5 to 9 percent by the second quarter of 2012.
Some results may come from the shift: First, not all solar companies will be able to survive with increased competition, leading to either consolidation, or worse, bankruptcy. Further, will the vertically integrated business model run by so many solar players continue to flourish moving forward as margins compress? New players will likely emerge as "specialists," investing resources into one aspect of the entire process.
Claymore/MAC Global Solar Index ETF (NYSE: TAN) closed down 0.45 percent.
With high photovoltaic prices recently curbing enthusiasm for solar installations, market-research firm IHS (NYSE: IHS) sees crystalline silicon (c-Si) modules dropping to $1 per watt by the first-quarter of FY12.
The price level might increase demand for installations moving forward as price levels will now balance potential cost savings for corporations and countries.
Recently, spot prices from top Chinese brands were at $1.49 per watt for mainstream c-Si modules. At the end of the recent Intersolar convention, those prices had dropped to about 1.30 per watt, according to IHS.
Still, while gross margins are about 10 to 12 percent in the current quarter, along with price drops come a pinch of those margins. Intense competition in the sector will bring margins to a range of 5 to 9 percent by the second quarter of 2012.
Some results may come from the shift: First, not all solar companies will be able to survive with increased competition, leading to either consolidation, or worse, bankruptcy. Further, will the vertically integrated business model run by so many solar players continue to flourish moving forward as margins compress? New players will likely emerge as "specialists," investing resources into one aspect of the entire process.
Claymore/MAC Global Solar Index ETF (NYSE: TAN) closed down 0.45 percent.
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