In the last few months, reviews of previously planned expansion programs, restructuring, lower revenue and profit forecasts, as well as cuts in production levels by solar power companies, have been widely covered, notes Frost & Sullivan in a new report.
According to Irina Sidneva, Frost & Sullivan's Asia Pacific program manager of energy and power systems practice, the key reason for the decline, as cited by industry participants, was the weakened demand for solar power projects in major markets like Europe and the U.S. as a result of the global credit crunch.
‘This has resulted in the current production overcapacity of solar panels, especially in Europe and the United States,’ says Sidneva. ‘There is also considerable pressure on industry participants to streamline their internal operations in order to cut costs, as well as to improve their bottom-line performance,’ she says.
However, according to Suchitra Sriram, Frost & Sullivan's Asia Pacific industry analyst of energy and power systems practice, the recently announced economic stimulus packages across the Asia Pacific region could lead to new waves of demand for solar power projects, resulting in a shift of demand from the traditionally strong markets in Europe and the U.S. to the Asian heavyweights such as China, Taiwan, South Korea, India and Australia.
‘These economic packages have strong potential to turn around the solar power industry in the short to medium term,’ says Sriram. ‘In China, the $440 billion stimulus package has put solar power as one of the key green energy resources to be developed in the near future. A number of solar power projects are already under construction throughout the country.
‘In Taiwan, a proposal was passed in April 2009 for around $1.3 billion to support research and development and the installations in green energy technologies,’ Sriram continues. ‘As part of this proposal, the government has highly prioritized the development of solar power projects, including the installation of Asia's first large-scale solar power plant.’
By increasing their shares of domestic market sales in Asia, many multinational solar power companies with manufacturing plants in the region can effectively deal with the production overcapacity problem faced in the U.S. and Europe, according to the report.
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SOURCE: Frost & Sullivan