Solar Industry Sees New Entrants and Some Exits (SPWRA, CRDN, AMAT, WFR, GE)

An expected 27,000 attendees are spending a few days in Los Angeles at the Solar Power International 2010 conference and exhibit. There are about 1,100 exhibitors, with a few unusual suspects sprinkled in.  The biggest announcement probably came from Korean electronics giant LG Electronics Inc., which has said that it plans to enter the North American solar panel market. The company has identified the US as one of the fastest growing solar markets in the world, largely due to federal and state incentives to build up alternative energy electricity generation.

SunPower Corp. (NASDAQ:SPWRA) is currently testing a solar concentrator device that uses reflectors to boost the amount of sunlight that hits the solar cells. Because cells convert sunlight to electricity at less than 25% efficiency, concentrating the sunlight increases the amount of light hitting the cell by a factor of six. Electricity generation rises without the costly and time-consuming process of trying to increase a cell’s conversion rate.

Away from the conference, the solar industry is also seeing some new entrants, some expansion by existing players, and some defections. Ceradyne Inc. (NASDAQ:CRDN) is best-known as a defense supplier, primarily of body armor. Some of the company’s high-tech ceramics are likely candidates for inclusion in lithium-ion batteries for the electric vehicle industry. So far the company is not saying much about what’s going on (it is a defense contractor after all).

Applied Materials, Inc. (NASDAQ:AMAT) earlier this year stopped selling a unique line of equipment specially integrated for thin-film manufacturers. The company will continue to sell the tools individually, but the market for thin-film equipment just did not grow fast enough. The falling cost of crystalline solar PV is the main culprit here.

Another supplier to the solar industry, MEMC Electronic Materials Inc. (NYSE:WFR) recently sold its stake in an Italian solar project for $373 million. MEMC is not really leaving the solar industry, it’s just cashing out on a deal it had with First Reserve Energy through its SunEdison division. The company has the contract to operate the solar plant when it goes online, but it won’t participate in the profits from the sale of electricity.

Finally, earlier this week General Electric Co. (NYSE:GE) expanded its portfolio in solar thin-film panels and inverters. The conglomerate wants to compete around the world for large-scale, multi-megawatt projects. This isn’t any kind of game changing announcement, but if GE thinks it can make money building solar power plants, there’s a good chance that real money is about to hit the table.

As the solar industry grows and big players like LG and GE get in the game, growth for the smaller players gets harder. Now, the competition is for large projects, and here, the bigger guys have the edge. And there’s virtually no chance that GE will be a high-growth stock any time soon. So the stocks look tired even though the market is expanding.

Paul Ausick