As Obama inflates the infrastructure bubble, his promised investment in alternative energy can’t come soon enough for solar companies.
Solar dominates alt energy, garnering $1.3 billion of the $2.9 billion in VC for the Q4 2008, as well as 40% of all clean tech investments for 2008. But the industry is stumbling into 2009.
In the past month, four solar companies fired employees:
- Day4 Energy (1/3 of staff),
- GT Solar (10% of staff),
- Emcore (100 in November),
- Advance Energy (7% of staff).
Of course, most companies are firing employees, so this isn’t a huge shock. More worrisome, though: Solar companies are slowing production because supply is outstripping demand:
Earth2Tech: In November, BP Solar announced that it would close a solar-cell factory in Sydney at the end of March. The news came after the company in October scrapped a $97 million expansion it had planned for a solar-ingot factory in Maryland. In December, German solar-cell manufacturer Q-Cells temporarily halted production at its factory, to clear stock, while U.S. solar-cell maker Evergreen Solar suspended plans for an $800 million factory in Asia and closed its pilot plant in Massachusetts.
And earlier this week, LDK Solar reported that its first polysilicon plant had not fully ramped up by the end of last year, as previously promised, and now expects to reach full production in the middle of this year. The company plans to produce between 3,000 and 5,000 metric tons of polysilicon this year instead of the previously expected 5,000 to 7,000 metric tons.
Adding to these companies woes, VC funds are strapped for cash across the board. Although clean tech investment was up 38% for 2008, it dropped to $2.5 billion for Q4 as compared with $2.9 billion in the Q3, (Greentech Media).
Merrill Lynch, meanwhile, says clean venture investment will drop 20% in 2009 due to funding problems. Merill also noted revenue for clean tech companies fell in the September quarter of 2008, the first drop since the March 2007 quarter. If all that isn’t bad enough, oil continues to slide and solar stocks tend to rise while oil rises and fall while oil falls.
In spite of all this bad news, Merrill thinks the clean tech industry will rally for 2009, including solar, where they anticipating a 26% growth in demand. What’s one possible driver of this rosy view? “There is possible upside in spending depending on the Obama stimulus plan.”
As far as the solar industry is concerned, Obama’s infrastructure bubble can’t get big enough.
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