In a weekend piece over at Barron’s, Eric Savitz sees a rough road ahead for the solar industry as capacity continues to outpace demand for years to come.  He highlights the fact that while demand has picked up ahead of the German solar subsidy cuts in a few months, capacity still outpaces demand and the situation will only worsen as the German subsidy cuts take place, putting some solar laggards out of business. 

Its a natural evolution of any evolving industry and the solar industry is still in need of a shakeout.  It’s actually amazing that so many solar companies managed to survive the financial collapse of 2008, but don’t expect many of these companies to survive in the years to come.  Some will get bought out, some will go under, but the industry is in great need of consolidation.

Savitz points out that Lux Research analyst Ted Sullivan sees supply and demand coming violently back into parity through company failures and zombie firms in China, where much of the excess takes place.  However, he doesn’t think US based firms are immune and singles out Evergreen Solar (ESLR) and the solar division of Energy Conversion Devices (ENER) as vulnerable. 

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