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Mergers between PV Companies Driven by International Integration and Expansion Strategies

published: 2015-07-25 0:33

Global PV industry has entered into a new chapter as several major mergers between international solar PV companies took place. Vertical or horizontal integrations are why PV companies merge with each other, and each company has to move depending on its own business strategies.

This Monday, SunEdison, a U.S.-based renewable energy company, and TerraForm Power announced to acquire Vivint Solar, a leader in U.S.’s residential solar market. One day later, SunEdison again declared that it will merge with one of UK’s leading home solar providers, Mark Group. In the meantime in Asia, China’s Tongwei Group announced to purchase 10% of shares in Gintech Energy, one of Taiwanese PV leaders. The international mergers between PV companies were mainly launched for higher profits and better global allocation. Instead of buying new equipment or establishing overseas manufacturing sites, companies with enough capital tend to turn to acquire, buy stocks, or merge with other companies to accelerate their allocations and deployment around the world.

M.K. Lu, Chairman & CEO of SAS, has pointed out that the future mergers between solar companies will be only for two objectives: to vertically integrate from upstream to downstream, or to horizontally integrate for scale expansion. Although different companies will choose diverse approaches, their destinations converge toward the same direction: reducing costs for being more profitable.

The major mergers and acquisition in 2014 and 2015 are:

Angus Kao, analyst at EnergyTrend, estimates that there will be only two to four solar PV companies lasted in Taiwan in the futhre. ASA acquired SUNRISE Global Solar Energy, Solartech and ALEO for vertical integration. In the contrary, mergers between Motech and TSi, and stock purchase by Tongwei from Gintech, are for expanding PV cells’ production capacity to maintain their superiority.

In the western market, mergers and acquisitions were not occasional. Companies with strong channel and sufficient capital like SunEdison and SolarCity have been merging with or acquiring PV module makers and solar system providers to optimize their services so that they can increase their ability to profit as well as expand their market shares.

In conclusion, PV companies that possess enough capital and sufficient resources will be seeking to expand their manufacturing scale and maximize operation efficiency by vertical and horizontal integrations. The integration and expansion will further strengthen the companies’ competiveness as the manufacturing costs could be significantly reduced.

This Week’s Spot Price

Stock of polysilicon was lowered during this week, yet the demand was weaker than last week. The quote of polysilicon remained as last week at US$16.1/kg.

Multi-si wafers’ prices slightly increased in the past week, while the average price of mono-si wafers was US$0.965/piece. First-tier multi-si wafer manufacturers that have signed to supply products to solar PV power plants were at full capacity, yet demand to mono-si wafers were flat.

In terms of PV cells’ spot prices, strong demand drives a upward trend. Super high efficiency multi-si PV cells’ spot price was stuck under a tension between providers and buyers. Taiwan-made multi-si PV cells’ average price slightly raised to US$0.294/W, while China-made multi-si cells’ price was US$0.289/W, the same with the price in the prior week.

Orders for PV modules were mostly from ground-mounted PV projects in China and from Japanese market. PV modules used on commercial distributed generation projects and residential systems were relatively weak at the moment because the constructions were launched later than ground-mounted large-scale PV projects in China. As a result, EnergyTrend projects a flat price trend of PV modules in the short term. High efficiency multi-si 260W modules’ spot price remained at US$0.538/W, and the quote of mono-si 270-275W modules were US$0.61/W, representing no difference from the price in the prior week.

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