Three years ago, with much fanfare, Canadian upstart Arise Technologies Corp. APV-T opened the doors of a brand-new solar cell manufacturing plant in Bischofswerda, Germany. With financial support from the German government, the operation was to be a key foothold for the Canadian company, giving it access to the lucrative European solar energy market.
Last month, Arise shut down the facility, unable to get sufficient financing to expand and upgrade in order to make high-efficiency cells. Arise’s German arm is now in insolvency proceedings, which could see its assets sold or disposed of.
Arise, like other Canadian companies that staked their future on manufacturing solar panels and cells, has fallen victim to falling prices that have resulted from overcapacity, intense competition, and weak markets. While the worldwide market for solar products has grown by an average of 30 per cent a year over the past two decades, the industry is now in a slump.
Manufacturers rushed to build capacity following a boom year in 2010. That pushed down solar cell and panel prices, which only fell further when the world economy staggered. The cost of a solar panel is now about 40-per-cent less than a year ago.
The glut of solar panels on the market is hurting everyone in the business, said Deloitte Canada analyst Duncan Stewart. “Too much supply, and the fact that some markets are cutting subsidies, means that this is a tough business no matter where you make the cells,” Mr. Stewart said. “It is now high-stakes poker; you need to be able to keep raising [money] in order to stay in the game.”
In Canada, the situation has been exacerbated by confusion in Ontario, where the provincial government has provided significant subsidies for solar installations, but bureaucratic issues in connecting them to the power grid have stalled growth. The recent provincial election campaign, during which the opposition Conservatives vowed to kill off key parts of green-friendly legislation, also tempered development of the solar industry.
The downturn goes far beyond Canada. In the U.S., solar giant Solyndra LLC recently filed for bankruptcy protection, and in October the CEO of First Solar Inc., FSLR-Q the largest maker of photovoltaic modules in the U.S., abruptly left his job.
“The entire solar industry is in severe crisis at this stage,” said George Rubin, president of Vancouver-based solar technology firm Day4 Energy Inc. DFE-T “A lot of the big players are fighting for their lives.”
Day4, while struggling with slumping sales and a diminishing stock price, has insulated itself from some of the industry’s problems by licensing its innovative solar cell technology to other manufacturers, which absorbs much of the production risk.
At Waterloo, Ont.-based Arise, however, manufacturing was a core of its strategy. When excitement over its German plans was at its peak in 2007, the stock traded at over $3. Now the shares are under 3 cents. The Toronto Stock Exchange is considering de-listing the company, and Arise is in talks for a “business combination” with another, unnamed, firm. To keep itself going, the company recently arranged a bridge loan of $1.5-million – at 12-per-cent interest.
A few kilometres down the road from Arise’s head office, another Canadian player has also taken a hit from the slumping solar cell market. Cambridge, Ont.-based ATS Automation Tooling Systems Inc. ATA-T couldn’t find a buyer for its Photowatt solar division in France, and has started bankruptcy proceedings for the unit. It is also having trouble spinning off its Ontario Photowatt division.
Even Canadian Solar Inc., CSIQ-Q a huge global maker of solar cells and modules with headquarters in Kitchener, Ont., and most of its manufacturing in China, has had to trim back plans for its new Canadian solar panel plant in Guelph. Canadian Solar stock is now well below $4, less than one-quarter of the value of a year ago, and a tenth of its peak level hit in 2008.
