SolarWorld AG’s photovoltaic solar module prices will decline more than 10 percent during the next two years, tightening a squeeze on the German manufacturer’s profit margins. That’s the forecast revealed in an interview with SolarWorld CEO Frank Asbeck set to be published in tomorrow’s edition of the German newspaper Handelsblatt, Reuters reports.
Asbeck, who led an out-of-the-blue bid for assets of German automaker (and GM subsidiary) Opel last month, isn’t the only solar exec expecting slashed prices next year. Earlier this month, the chief executive of rival Suntech, Zhengrong Shi, said he expects oversupply and top-to-bottom cost cuts to help drive the company’s prices down 20-30 percent compared with the third quarter of this year. Shi added that the sector as a whole could slash prices by half as soon as 2013.
At the same time, module makers like SolarWorld have new competition from polysilicon suppliers: With a major glut on the horizon for 2009, BusinessWeek reports, they’re starting to break into the higher value-added module and wafer business.
With a drop of only 10 percent, SolarWorld’s retail prices may not keep pace with the competition through a looming industry shakeout. However, the company’s anticipated 30 percent sales increase could help it stay in the game. According to Reuters, SolarWorld could see its operating profit margin slip to 30 percent, down from the 32 percent EBIT margin reported for the first nine months of 2008. In an effort to climb back up, the company plans to double its R&D budget to 40 million euros (about $57.3 million) in 2009, up from 20 million euros this year.