Two very interesting news items caught my eyes and reinforced a trend that is becoming strong.
The first news came last week, and was about MEMC’s announcement that it is planning to change its name to SunEdison. The company’s filing to the Securities and Exchange Commission in the US says that
“This name change does not reflect a change in business strategy related to either of the company’s segments. Rather, the name change will better reflect the synergistic nature of the two businesses and help create and maintain one powerful, global brand name. The company believes the SunEdison name best represents the business, has greater long-term brand equity, scalability and broader appeal in the marketplace”.
This seems quite inevitable. Sun Edison, which is today among the top 3 Project Developers globally, was acquired by the then PV Manufacturing giant MEMC in late 2009. Since then, the manufacturing part of the company has been bleeding due to the global oversupply, whereas the projects division – SunEdison- has been galloping.
According to GTM Research, SunEdison accounted for 24% revenues of MEMC in 2010, and it is estimated at 56% in 2012. Not only that, since SunEdison is directly interacting with the end-customer, the brand-equity for SunEdison would be way higher than a Business-to-Business(B2B) entity like MEMC. In short, the name change makes lot of sense. But it also highlights the trend that the solar downstream(project development/PV deployment) is where the revenues are to be made. The upstream(manufacturing) is extremely competitive and is undergoing intense consolidation(Refer to the list of manufacturing companies going bankrupt, here and here).
The second news was about the Top 10 global Project Developers list published by Wiki-solar. The list is given below.
The interesting aspect about the ranking is that First Solar, which used to be a stand-alone Thin Film PV manufacturer is the Number 1 Project Developer. Sun Edison, the subsidiary of a manufacturer(MEMC) comes at Number 3 spot. Another PV manufacturer turned developer – SunPower Corporation also makes it to the Top 10 list.
Wiki-solar also has released the list of the top EPCs and top module manufacturers.Guess what? FirstSolar tops the ranking in these 2 categories as well.The list of the Top 10 PV manufacturers is given below.
The takeaway is that First Solar has successfully transformed itself from a PV manufacturer to an EPC contractor as well as a project developer. First Solar is now present across the entire value chain of solar power generation.
The same is true for MEMC/SunEdison and SunPower. In this article, Shyam Mehta of GTM argues that while these 3 American companies reconfigured themselves to the changing marketplace, their European manufacturing counterparts like Bosch, REC, SolarWorld, etc were more conservative and chose to remain as manufacturers, which was perhaps a bad decision.
This trend of manufacturers integrating forward to EPC and Project development is visible in India as well. Moser Baer is a prime example of this. The company realised the inevitable and started building projects since 2011. A Forbes article on Moser Baer, chronicles how Moser Baer was forced to make this shift. (More details here). According to Moser Baer, they have developed more than 250 MWp of projects in different states of India and another 200 MWp in Europe. This includes a 5 MWp project in Tamil Nadu and 30 MWp in Gujarat(partial list available here).
Tata Power is another company which is present across the entire PV value chain. Tata is not only a manufacturer, EPC and developer, it is also a power distribution company.
Companies like Vikram Solar, Waaree Energies, EMMVEE Solar have also successfully made this transition. A partial list of Indian manufacturers doing EPC/Project Development is given below.
Given this strong trend, will stand-alone manufacturers survive? Chances are slim. ___________________________________________________________________________________________
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