With a tumultuous 2011 winding down, many solar firms do not dare to have optimistic view on the industry in 2012. Industry sources believe firms with strong financial support will be able to survive better in 2012.

Industry sources believe unless demand shows surprising growth, the oversupply problem with weak market demand will likely continue to exist. The optimistic estimates of demand in 2012 is around 20-25GW, however the world supply capacity of solar products is around 50GW. Therefore, it would be hard for solar firms to obtain reasonable profits.

Industry sources added that increase in demand may be the only way to solve the oversupply problem because existing capacity will not decrease through mergers and acquisitions. Some capacities are currently hibernating and they will come back once the market returns to normal.

Financial support is very important for solar firms to survive in 2012, said industry observers. The price of solar products have dropped significantly in 2011 due to oversupply and inventory clear-outs. Many solar firms have been facing losses in 2011, therefore there will be less room for losses to occur. Firms with continuous flow of financial capital will fare better if the market remains the same in 2012.

Source:digitimes