Ellick Liao, the chairman of the Solar Energy Corporation (TSEC) in Taiwan, recently highlighted key challenges facing the solar energy industry in the region. He pointed out that brand recognition remains weak, and distribution channels are not well-controlled, which hinders the industry’s growth potential. According to Liao, the current supply of solar products in Taiwan exceeds market demand by 150% to 200%, a significant imbalance that has persisted for nearly 18 months.
This overcapacity issue was further exacerbated by the European debt crisis, which began intensifying in the second half of 2011. As Europe is still the world's largest solar market, the decline in demand there had a direct impact on the global solar industry. Despite this downturn, Chinese manufacturers continued to expand their production capacity in 2011, leading to even greater supply-side pressure.
Liao noted that the supply-demand imbalance has led to a sharp drop in prices. By the end of 2012, solar product prices had fallen to just 25%–43% of their levels in January 2011. In addition, over the past two years, Taiwanese photovoltaic wafer and battery manufacturers have collectively lost more than NT$20 billion (approximately US$675 million). The situation is even worse in mainland China, where over 60% of companies have either shut down or are operating at a loss.
Despite these challenges, Liao remains optimistic about the long-term prospects of the solar industry. He believes it is among the top ten fastest-growing sectors over the past decade. Between 2011 and 2012, the annual compound annual growth rate (CAGR) of solar photovoltaic systems reached an impressive 60%. Once the cost of solar power generation in developed countries like Europe, Japan, Canada, and Australia becomes lower than that of fossil fuels, the first phase of commercialization will be achieved.
Liao also pointed out that the trade tensions between Europe and the U.S. have created some breathing room for Taiwanese companies. These conflicts have helped curb the aggressive expansion of Chinese manufacturers and narrowed the cost gap between mainland and Taiwanese firms.
However, he warned that despite these opportunities, Taiwanese companies have been losing money for 20 consecutive months and lack the resources needed to drive sustainable growth. If they fail to strengthen their competitiveness, the market could become very limited once European and Chinese parties reach an agreement.
Liao emphasized that the current state of the solar energy industry in Taiwan lacks both horizontal and vertical integration. Most companies focus only on producing mainstream products without owning their own brands or distribution networks, which limits their connection with the end-user market. He also mentioned that mergers and acquisitions take too long and often miss current market opportunities.
To address these issues, Liao proposed that four or more companies—covering solar cells, wafers, conductive pastes, and components—could form a joint venture to create a strong sales representative entity. This company could also partner with one or two overseas firms to establish a solar photovoltaic system business and promote "Made in Taiwan" products.
He suggested that the company should focus on major markets such as Europe, the U.S., and Japan, setting up local sales offices and manufacturing or foundry plants to reduce transportation costs and avoid potential trade barriers. Additionally, the company could operate its own branded business, sourcing most materials from shareholders while maintaining the ability to purchase external supplies to sustain competitiveness.
Finally, Liao recommended establishing R&D centers to develop next-generation products and collaborating with investment banks to launch solar investment packages for investors. This approach, he believes, would help position Taiwan as a stronger player in the global solar energy market.
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