Tumbling oil prices will maintain pressure on the solar industry to consolidate by drying up investor interest in building new factories, according to an executive who just carried out a $1.2 billion merger.
Dong Kwan Kim, chief commercial officer of Hanwha SolarOne Co. (HSOL), said the industry has been “unfairly penalized for oil prices” and that the company that ranks among the top three panel makers may return to profit this year for the first time since 2010.
“When oil prices were very high and green energy was a sexy, hot sector, I think a lot of money was pouring into overcapacity,” Kim said in an interview at the World Economic Forum in Davos today. “The oil price should help in that sense while not hurting our business materially.”
Oil’s decline is thwarting the sort of deals that built China’s solar industry in the last decade — and left it with a crippling excess of capacity that gutted prices and margins across the industry.