Do you remember the predictions of solar industry consolidation? Predictions that eventually the market would consolidate from 4000 businesses to four or forty major solar companies serving the Australian market?
The logic seemed sound: the solar market was contracting year on year from 2012-2016, and the residential backbone was eroding even faster. Along with it, system prices kept falling, meaning revenue was plummeting even as operating costs and red tape rose.
America had seen the market share of the top player exceed 40% - wasn’t this Australia’s destiny? Wasn’t Origin or AGL or SunEdison or True Value Solar going to sweep away all the small businesses? Force the exit of smaller players either by out-competing them or by buying them out?
What was a small business to do, except grimly hold on and hope that the others went bust before them? Grimly holding on meant matching your competitors prices at a level that was absurdly and unsustainably low.
Or a small business could pray each night that a buyer would come along. Apart from a couple of fellas who got lucky - selling their business at the height of the solarcoaster and returning to solar in 2017’s boom year, most that discussed selling up discovered their business value was practically worthless. The value of their pipeline was more than offset by the potential liability of past installations, leaving business processes being the only value in a solar company - processes that weren’t particularly robust, easy enough to recreate, and processes that a buyer would find difficult to integrate into their own.
Now there have been plenty of businesses that have gone bust in the past 5 years. This would suggest a degree of industry consolidation has occurred through attrition. However it seems that an equal number of businesses have been started.
The charts below prove that industry consolidation has not occurred. Indeed, SunWiz’s market assessment demonstrates that the opposite has occurred: the solar industry is now more competitive than ever, with no single company able to dominate.