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Asia Report: Panasonic Freezes New Investment in Malaysia PV Manufacturing

Japanese electronics giant Panasonic, which became a major global solar PV manufacturer after taking over rival Sanyo, will freeze new investment in its state-of-the-art wafer, cell and module manufacturing plant in Malaysia amid challenging market conditions and crippling losses across the group.

In a presentation published on its website following second-quarter financial results, Panasonic revealed a shift from its strategy of expanded cell production amid a changing business environment to “selective and reduced investment,” including “no additional investment in [the] factory in Malaysia.”

In July, Panasonic announced plans to move some of its global solar module production from less efficient plants in Europe and Mexico, to the Malaysian plant at the Kulim Hi-Tech Park in the state of Kedah.

The company came under increasing pressure to cut costs by concentrating its production in Malaysia, where integrated production of wafers, cells, and modules means costs are lower. Production in Hungary, which produced 315 MW last year, has been scaled back by 30 percent.

The company said it would “expand system and solution business to improve profitability”, focusing on the Japanese housing industry and integrating R&D, production and sales operations in its eco solutions company.

Due to open next month, the wafer, cell and module plant was built at a cost of 45 billion yen ($564 million), upping the company’s capacity by more than one-third to 980 MW. The company had planned to ramp up production to 1.5 GW.

The electronics giant forecasts it will make an annual loss of nearly $10 billion across all of its businesses, revealing it was taking a 148 billion yen impairment charge for restructuring its solar business.

Sales in its energy division, which includes solar panels and lithium-ion batteries, dropped by 5 percent to 292.5 billion yen in the second quarter of the year, hit by lower sales of solar panels to Europe. Profits in the division were up to 2.8 billion yen from a loss of 9.8 billion yen thanks to cost reductions and streamlining raw materials, said the company.

IN THE NEWS

Sharp’s solar business posts 5.3 billion yen operating loss: Japan’s Sharp reported a 5.3 billion yen ($66 million) operating loss at its solar cell and module business, as sales of solar products rose 22 percent to 51.1 billion yen in its second quarter ended 30 September from the prior three months. The company admitted there is “material doubt” about its ability to stay in business. It plans to expand in Japan and shift focus to Asia from Europe and the U.S., its president, Takashi Okuda, said.

Suzlon seeks to recast $2 billion debt after default: India’s Suzlon Energy proposed a restructuring for 107 billion rupees ($2 billion) of bank loans, offering to repay them over a decade. India’s biggest maker of wind turbines has begun talks with lenders for a two-year moratorium on interest and principal repayments. The company also suspended guidance for the current fiscal year due to liquidity constraints, volatile market conditions and problems financing its debt. Earlier last month, Suzlon made the biggest default on repayments by an Indian company after bondholders rejected its request for a four-month extension to more than $200 million of debt.

China launches fair-trade probe into EU polysilicon imports: China's Ministry of Commerce said that it has launched an investigation into whether European companies are selling polysilicon at unfairly low prices. It will also probe whether the companies received illegal subsidies.

Mitsubishi-Tokyo UFJ to invest 8.6 billion yen in mega-solar project: The Bank of Tokyo-Mitsubishi UFJ said it will lend 8.6 billion yen ($108 million) to Eurus Energy Holdings for its first “mega-solar” plant – a 30-MW project in Shiranuka, Hokkaido. The bank and the renewable energy operator signed a financing agreement for construction of the plant, set to be completed in 2014. It will be one of the largest loans extended for a solar power project in Japan.

Indonesia’s LEN and Pertamina to build 60MW solar cell production plant: Indonesia’s state-owned companies LEN Industri and Pertamina are collaborating to build a solar cell production plant in Rancaekek, Bandung. The plant will be able to produce solar cells with a capacity of 60 MW.

Australia’s opposition coalition to ditch carbon tax: A federal coalition government would scrap both the carbon and mining taxes and therefore some of its own plans would have to be delayed, opposition leader Tony Abbott said.The first big economic reform of the next coalition government will be to abolish unnecessary taxes," he told the Melbourne Institute 2012 Economic and Social Outlook Conference.

ON THE HORIZON

China strives to develop renewable energy and safe nuclear power: China will actively develop hydropower, solar power and wind power generation, seek safe and efficient ways of developing nuclear power, as well as utilize biomass energy and other types of renewable energy. China’s goal is to increase the share of non-fossil fuels in primary energy consumption to 11.4 percent and increase that of installed generating capacity from non-fossil fuels to 30 percent by the end of 2015, a government white paper says.

Indonesia to lead Southeast Asia PV to 5 GW: IMS Research predicts the installed PV base in Southeast Asia will reach almost 5 GW by 2016 as the region becomes an increasingly attractive market for suppliers facing lower demand in Europe. The report reveals that the region will grow at 50 percent per year on average over the next five years, providing an attractive market for ailing suppliers in Europe. IMS singles out Indonesia and Thailand as the likely source of fastest growth.

A DEEPER LOOK

Solar wind blows up a flurry of deals: Big Asian manufacturers are scooping up next-generation US solar technology for cut-down prices, but face a long slog to turn these start-ups into serious competitors for the Chinese panel makers that now dominate the market. China's Hanergy Holding Group became the latest Asian manufacturer to make a bet on a US maker of solar panels that use copper indium gallium selenide technology, or CIGS, when it agreed to buy Silicon Valley startup Miasole.

China vs Europe: A great renewables contrast: The headline of the week in renewable energy was the $1.6 billion credit line extended by China Development Bank to Sky Solar Holdings – a Shanghai-based PV power developer. In sharp contrast, Europe's Siemens announced its exit from the solar business altogether, and the Danish government ruled out any support for Vestas.

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IN CASE YOU MISSED IT

Oct. 27-Nov. 2, 2012 Asia Report: Brightsource and Alstom Target Australia and India with New Funding

Oct. 19-26, 2012 Asia Report: First Solar Enters Nascent Indonesian Market with 100-MW Deal
Aug. 21-28, 2012 Asia Report: US Accused of Killing India's Solar Energy Industry
Aug. 6-20, 2012 Asia Report: South Korean Solar Companies Make Strong Push Into U.S. Market
July 23-Aug. 6, 2012 Asia Report: World Takes Hard Look at India Grid, Promises of Solar

Lead image: Money in ice via shutterstock

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