| Plunging silicon prices - The light in the tunnel for solar companies |
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2009-11-18
Because of a large oversupply of silicon in the market the price of solar panels has collapsed in 2009, down 50% in one year. The falling prices have in turn squeezed the margins of producers, which in turn got investors to sell their solar stocks and in turn sending the share prices in to free fall. HSBC now believe, in a new report, that the problem of pricing pressure also can be many companies rescue. The sharply falling prices, HSBC sees 20% downside in solar module prices in 2010, has increased the competitiveness of the solar sector significantly. Solar energy is currently estimated to be only 2-2.5 times more expensive than traditional power sources to compare with 5-6 times more expensive for just a year ago. HSBC believes that the price pressure entails considerable increases in growth, consolidation and economies of scale for the industry which in turn could push the price further. If the forecast is correct, and companies are able to adapt to the new market conditions, it is highly likely that solar energy can be competitive (reach so-called "grid parity") with traditional power sources in major markets (Germany, Spain, parts of the U.S.) already in 2013. Another effect of the sharply falling prices of silicon is that the importance of the silicon price decrease while other costs, like production and labor costs, increases in importance. Silicon cost is estimated to one third of the module cost in 2011 compared to 2008 when it accounted for fully two-thirds. Especially Asian manufacturers have benefited and will benefit from this effect because their labor and manufacturing costs are 30-40% lower than European and American competitors. The latter are now moving over large parts of their production facilities to Indonesia and Malaysia in order to adapt to the new situation. 
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Save Earth Fund invests in renewable energy, environmental technology and water management through actively managed funds, ETFs and stocks. The fund is the only of its kind in Sweden. Our aim is to generate a return that clearly exceeds that of the MSCI World index, with a lower than the average risk of environmental funds. No minimum investment. The management fee is 1%. Daily subscriptions/redemptions. Mr Carl Bernadotte, Mr Alexander Jansson and Mr Marcus Grimfors are responsible for managing the fund. Learn more about our managers here. |