The founder of the fourth largest solar panel maker in the world said that the rate of mergers in the solar manufacturing industry will grow in the next three years because of declining technology costs and increasing demand for installations, Bloomberg reported.
Chairman Jifan Gao of Trina Solar Ltd said that by 2017, he believes that China will be left with three to five solar companies by 2017 that will hold 80% of the market share of the country. At present, there are around a dozen firms that have the capacity to produce over 1 gigawatt of solar cells annually, the report said.
In an interview at the World Economic Forum in Davos, Gao said, "Consolidation will continue. We've only seen the first stage. That will be a good situation. This will be achieved by mergers and acquisitions."
Since 2010, the prices of solar cells have gone down 70% as demand growth was outpaced by production capacity. This led to a squeeze in profit margins throughout the industry and resulted in the bankruptcy of Suntech Power Holdings Ltd in China. The company is the largest manufacturer in the world, the report said.
In 2012, the rivals of Trina in the panel-making industry are Yingli Green Energy Holding Co, Suntech and Canadian Solar Inc. Based in Changzhou, China, Trina was the third largest globally in 2010 and 2011, the report said.
In the third quarter, Trina was able to make a profit for the first time in over two years. Gao believes earnings will increase with improving sales and steady cost controls. Since November, its shares have grown over three-fold, the report said.
Gao predicts demand for installations. He said, "I see a 20 percent to 25 percent annual increase in installations across the industry, and Trina will certainly beat the average. Our revenue and profits should also grow, in line with such market expansion."
Join the Conversation