Consulting Firm Says Solar Manufacturers Should Raise Prices

Posted by SI Staff on June 25, 2013 No Comments
Categories : New & Noteworthy

Germany-based Simon-Kucher says half of the solar companies it surveyed for a recent study of the green-tech marketplace are under pressure due to inadequate financial resources, poor market performance or both. The prescription, according to the management consulting firm, is to raise prices: Many of the underperforming companies are simply charging too little for their products.

Looking at the different green-tech sectors, the wind energy companies are especially well positioned, with moderate to strong financial power and above-average market performance, the report says. Solar energy firms are among the weakest performing.

According to the report, solar firms that increased their prices by 2% could expect significant improvements in financial performance. Such increases, the company says, could achieve results faster under the current volatile market conditions than attempts to compete on the basis of product quality.

‘Quality as a competitive advantage is not an easy way to differentiate from competitors,’ Simon-Kucher Director Alexander Thoele tells Solar Industry. ‘The differences in quality have become smaller between module producers from Asia and Europe during the last years, and it is hard for customers to judge the product's quality prior to purchase.’

Thoele says most companies claim their products are ‘premium,’ and therefore, it is very difficult for consumers to distinguish between them in terms of quality. Thus, the issue of defect rates plaguing the PV industry will tend to be a clear disadvantage for those companies affected but less likely a clear advantage for others.

‘The current down market in the PV sector has already led to a lot of insolvencies, and the end of this development is not yet foreseeable,’ Thoele says. ‘We believe that the majority of all market players will vanish in the coming years. Only companies who are able to develop clear competitive advantages will survive the current consolidation.’

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