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US Panel Maker: Too Hard To Compete With China

Manufacturing near your market has inherent advantages. But this past week's news shows that other factors can easily trump location.

A day after American solar manufacturer Evergreen Solar filed for bankruptcy protection, German-based Solon announced it was shifting strategies and proactively shifting away from manufacturing in the U.S. in a move that will also eliminate 60 jobs.

The two companies may have faced similar hurdles, but they’ve also taken different paths. For Evergreen, the filing will allow the struggling manufacturer to re-organize and see if it can stay in business.

Solon, meanwhile, sees its decision as a move toward economic reality. Can a 60-megawatt (MW) American manufacturing operation compete with large Chinese panel makers, even when the end market is on U.S. soil? Some companies are clearly saying yes. But for Solon, the answer was no.

The U.S. utility-scale solar pipeline includes about 27 gigawatts (GW) of projects — some under construction but most under development. These projects are getting bigger by the week, and Solon felt that it could not compete with Chinese manufacturers in an industry in which an 8 GW inventory continues to push down prices.

“Right now, prices from China are extremely attractive,” said Ed Wegener, Solon’s Vice President of PV Products for its American division. “There are structural advantages that the Chinese have that will keep a spread between the Chinese and U.S. manufacturers. Oversupply, government policy and scale are really what drives that.”

The scale, said Wegener, may be the biggest factor. As several-hundred MW projects become the norm, smaller American manufacturers struggle to get in the game on their home turf.

“The issue we kept coming back to was scale,” he said. “We’re a small player in a business that is more and more dominated by people that are 10 to 15 times our size. And I couldn’t see a way forward where we had a competitive enough cost structure without investment beyond the resources of our company.”

So, Solon is taking the opportunity to reinvent itself as a developer ahead of the building boom. The company is listed by SEIA as the developer of two utility-scale projects currently under development — 15 MW planned for Fresno, Calif., and 5 MW in Tucson. It also has a 17-MW facility under construction in Gila Bend, Ariz., as well as one existing 2-MW facility in Vacaville, Calif.

“We’re moving ahead with those projects,” he said. “We have a strong pipeline of projects, and we’re not standing still.”

To get there, Solon is shifting existing employees from manufacturing engineering into product development and research as it moves away — quickly — from the business of making solar panels.

“We’re recognizing the realities of the world we live in,” said Wegener. “We have to be more closely aligned with what the market is looking for. There are too many conventional solar panels in the world, and there has to be a better value proposition for the end user. I think we just recognized that competitive reality a little sooner than other people will.”

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