Solar module manufacturers moved buildout capacity ahead of demand in 2011, a problem that persists today and which is exacerbated by the slowdown caused by subsidy resets in Europe and the U.S., says Ben Kallo, an Analyst at Robert W. Baird & Co.
“But really it’s building out capacity, and mostly this is Chinese manufacturers that built out capacity, which has outstripped demand. What I’ve continuously looked for to become more positive is a slowdown, and then even a curtailment of capacity,” he said.
Kallo points to First Solar, Inc., (FSLR) as an example of a company that is reducing capacity in the solar manufacturing arena. He says FSLR has undergone restructuring and is more focused on the balance sheet side of its business in moving to markets that aren’t related to subsidies.
“This could be in South America, this could be in Middle East, North Africa. And so this is an evolution of a business model where I’m purely a module manufacturer to where I’m actually making energy products. I’m acting more like an engineering procurement construction firm,” Kallo says.
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