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Who will survive the solar energy shakeout?

The recession is squeezing solar energy firms. These four could thrive.

By Margaret PriceCorrespondent / July 29, 2009

SunPower Corp. solar panels at Nellis Air Force base in Las Vegas.

Steve Marcus / Reuters

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Until the big chill, the solar energy was red-hot, tearing along with a decade-long growth rate that averaged 50 percent a year.

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Then the global recession hit – and the fizzling of subsidies in Spain and a credit crunch – which squeezed financing for many solar projects. Production slowed at plants making panels that turned sun into electricity. Prices fell sharply.

So now, despite climate-change legislation in the United States and a push for cleaner energy worldwide, a global industry shakeout looms, many analysts predict. And not a small shudder. They anticipate an earthquake of consolidation likely to leave only strong competitors standing.

Currently, some 250 companies around the world make solar photovoltaic modules.

“In five years, there probably can be only a couple of dozen of them,” says Travis Bradford, president of the Prometheus Institute for Sustainable Development in Chicago. “At most.”

Which companies will be the winners? The ones with deep pockets, cutting-edge technology, and a rigorous focus on cutting costs. They’ll need to be big enough to build a brand name and demonstrate staying power. As close observers explain, customers want to know that the solar-energy companies they buy from today will be around to honor their warranties in the future.

Although opinions differ on who the winners will be, four names keep popping up: First Solar Inc. and SunPower Corp., both based in the US; Sharp Corp., headquartered in Japan; and SunTech Power Holdings in China.

In their own way, these firms have already distinguished themselves in a crowded field. If they do emerge as winners, their host countries can probably bank on building networks of solar-energy related suppliers around them, analysts say.

Various kinds of solar technologies exist – from simple hot-water heaters for homes and pools to multiacre installations that can generate electricity on a utility scale. But it is photovoltaic (PV) technology, which turns sunlight directly into electricity, that’s the fastest-growing technology – and is already the largest component of the solar market in the US, according to the American Solar Energy Society, in Boulder, Colo.

Here’s a look at the four potential winners in the coming shakeout.

Leader in thin films