Q-Cells and Hanwha: Solar Geopolitics Gets Messy

Ucilia Wang, Contributing Editor
August 30, 2012 | 7 Comments

The pending sale of bankrupted Q-Cells, once the largest solar cell maker in the world, to Korea-based Hanwha Group is the latest reminder that playing geopolitics in the world of solar will only get harder.

The creditors of the German company agreed to the sale with a vote on Wednesday, though the sale still requires regulatory approval before it’s finalized. Hanwha will gain a sterling silicon solar cell maker by buying Q-Cells, which was the reigning cell maker back in 2008, before it ceded the spot thanks to the financial market crash and the rise of well-financed Chinese solar cell makers.

Though silicon solar technology was the core of its technology portfolio, Q-Cells, when it was in better financial health, experimented with different thin film processes and gambled with the idea of using refined, metallurgical-grade silicon as a substitute for the more expensive and purer silicon to make cells. It also entered into the solar power plant development business. The company filed for bankruptcy in April this year.

Despite its financial trouble, Q-Cells remains a symbol of good Germany solar engineering. And now it’s set to look to a Korean conglomerate for directions about its future. Several Korean conglomerates have scooped up or at least taken a stake in many solar companies in recent years. Hanwha took over China-based Solarfun Power and renamed it Hanwha SolarOne. It invested in several American startups, a solar energy system developer tenKsolar, installer OneRoof Energy and silicon wafer makers 1366 Technologies and Crystal Solar. Hanwha bought Solar Monkey to enter the power plant development business — the company formally announced its entry earlier this summer. It also invested in energy storage developer Silent Power.

Hanwha’s aggressive push into the solar market is taking place at a time when tension is rising between Chinese solar manufacturers and some of their rivals in the U.S. and Europe. SolarWorld, a German solar cell and panel maker, led a trade complaint in the U.S. and Europe against Chinese silicon solar cell makers over the past years. The complaint alleges that Chinese companies have received unfair subsidies from Chinese government and flooded the market with cells that are below fair market value. The trade case reflects the intensifying competition among solar manufacturers in a market that has been plagued by a gross oversupply of solar panels. Many companies in the U.S., Europe and Asia already have filed for bankruptcy or shrunk their operations in the past year and a half.

U.S. authorities already are imposing preliminary tariffs on imported Chinese cells after finding merits to SolarWorld’s case. They are scheduled to make a final decision on the tariffs before the year ends. German Chancellor Angela Merkel, meanwhile, is seeking to play the mediator in the European case.

Which side should a company like Hanwha take in this battle against Chinese companies? Hanwha SolarOne’s executives told me during a meeting at Intersolar in San Francisco in July that the company wasn’t “immune to the challenges of the marketplace” in terms of manufacturing, but they saw good opportunities to invest in different solar sectors at the same time. To avoid the preliminary tariffs on China-made solar cells, the company is using solar cells from Taiwan to make panels for the U.S. market (other Chinese companies are doing the same).

Although the solar manufacturing sector is suffering, the project development and installation business is thriving, particularly in countries with government mandates and incentives, such as the U.S., India, China and Japan. The growth has come in part because of the rapidly declining solar panel prices and efforts to reduce in other areas, such as securing permits and simplify installation methods. For solar energy proponents, all the competition and resulting price reduction of solar equipment is a good thing. They see a trade complaint as an attempt to stall the move toward a greater goal: to make solar electricity as cheaply as power from fossil fuels.

The sentiment that Chinese companies haven’t played fair isn’t coming only from SolarWorld and those who have joined SolarWorld’s trade complaints. But executives at many non-Chinese manufacturing companies will only be diplomatic when they are on the record to discuss the trade dispute. And they do so because they know that drawing a line between China and the rest of the world isn’t a good idea when there is a growing interdependence among companies of various nationalities to grow their business in the global market. Hanwha’s acquisition of Q-Cells is a good reminder of that.

7 Comments

Jan de Boer
September 3, 2012

@m4daredsun: 'It is not a matter of technological development. That happened for sure.' We agree,. 'The issue is more related to the usage of the solar cell. German FIT created a distorted market in Germany allowing e.g. for the creation of large solar plants in a country where annual insolation is ridiculous. ' The real distortion in the market is that society picks up the bill for the externalities of conventional power production. The insolation in Germany is not that bad. In Mediterranean countries it is 1.5 to 2 times as high, at the equator 3 times as high. It would have been cheaper if one of these countries would have taken the lead, but other countries did not do it. Germany should be praised for their moral courage. 'With at least one very important side consequence: shortage of material like Si or Indium due to misuse in a world which is becoming more and more resource poor. ' Silicon one of the worlds most abundant elements, sand is mainly silicon oxide. A few years ago there was a shortage of pure silicon. That was resolved by building more factories. Indium is only used for one particular type of solar module that serves a small fraction of the market. 'As ArnoAEvers wrote in his 1st post, new ideas are needed and new applications for PV MUST be found and this should be done quickly.' Or German politicians should stop the destruction of the EEG. 'PV is not meant to replace carbon and nuclear power in a couple of years. ' Not meant by who? 'PV (& other renewables) have to create their own market otherwise the technology will become uninteresting and many more companies will go bankrupt.' The whole idea of the German FiTs is to lead the industry to competitiveness by a steady reduction of the FiT rates. And it has come far. In Germany a solar kWh is now cheaper than a kWh bought from the utility. It is sad the current German government strangles the program so close to the finish line.

Mauro Furno
September 1, 2012

It is not a matter of technological development. That happened for sure. The issue is more related to the usage of the solar cell. German FIT created a distorted market in Germany allowing e.g. for the creation of large solar plants in a country where annual insolation is ridiculous. With at least one very important side consequence: shortage of material like Si or Indium due to misuse in a world which is becoming more and more resource poor. As ArnoAEvers wrote in his 1st post, new ideas are needed and new applications for PV MUST be found and this should be done quickly. PV is not meant to replace carbon and nuclear power in a couple of years. PV (& other renewables) have to create their own market otherwise the technology will become uninteresting and many more companies will go bankrupt.

John Miranda
August 31, 2012

You can thank the captains of Capitalism and their lackeys, Big Oil, who do not see sustainability of the planet in their strategic planning models, for this mess. From the manufacturing standpoint, in the U.S. between 2002 and 2008 Big Oil, Gas and Nukes, received $72B in subsidies, while renewable/sustainable received $18B, and then of course the FITs, designed to give renewable technologies a kick-start, which have made it to only a handful of cash-strapped states, instead of becoming national in scope, have been virtually non-existent here. 'Cap and trade' What's that? Undue government meddling and regulation. NIMBY. But wait! There's more!! Now we have to nuke Iran, yet another war, that will keep the rich in the M.I. Complex getting richer for another 10 years. And the oddest thing of all is that the greenest sector in the U.S. is the military. Of course, China is ruthless. Wouldn't you be if the 1% of the Capitalist world surrounding you wants to destroy you, if the 'far right' (can't use the 'N' word) is trying to destroy you to achieve total control of the planet? Think not? Think again. What was the phrase du jour when the Soviet Union fell? (hint: 'we (Capitalism) won') We'll see renewable energy success when it suits the needs of the Western 1%. Meanwhile it suits the needs of the Eastern 1% to prevent that. They know very well that oil has peaked, the cost to extract it will only go up and our high standard of living built and based upon a cheap supply is unsustainable without it. 'Let them eat their $600+T-derivative-debt greed cake'

Jan de Boer
August 31, 2012

Your original statement was that the FiT prevented ANY progress in technological development. So that would mean that the PV-technology of today is exactly the same as in 1990. That is just silly. The solar modules of today are cheaper, more efficient, use less energy and material to produce. Inverters have become cheaper and more efficient, and currently include smart monitoring devices. Support constructions have become lighter, cheaper and easier to install. There has been tremendous development in manufacturing techniques. All these improvements have come because there was a market, created by the FiTs, that steered R&D. In the improvements German companies and research institutes have been on the forefront. Even the Chinese factories spewing out cheap solar modules are built with German technology. There are several reasons why German solar cell and solar module producers go bankrupt at the moment. Lack of innovation is not one of them. The German FiTs have propelled innovation, and without it PV would still be a very expensive niche-product for off-grid applications.

Arno A. Evers
August 31, 2012

Thank you Mr JdeBoer,
we all have our opinions and I think we are not far off.
Of course it is a little difficult to oversee the snags which are built in the various German FIT`s: As I am following them since the beginning in the 1990, the result proofs me right:
The German PV Companies are going bankrupt and the reasons
for that I have explained above.
Thank you, for your kind understanding.

Jan de Boer
August 31, 2012

@ArnoAEvers: your understanding is wrong. The German FiTs created a competitive open market for PV products. The declining rates inherent to the German FiTS, forces companies to innovate to reduce costs. For a layman these innovations may not be so visible, the solar modules of today do not look that different from the ones produced ten years ago, but under the surface the changes are enormous. Without the German FiT we would not have had these innovations and the fast falling PV prices of today.

The main resistance against FiTs comes from power companies who don't like that anyone with a roof can start to be a competitor, and free-market-extremists because it does not fit in their simplified high-school theory of economics. According to these theories a quota system would be better, but practice has shown that FiTs deliver more renewable power, at lower cost. The UK has much higher wind speeds than Germany, a kWh of wind energy costs more in the UK. The UK uses a quota system. The only advantage of a quota model is for the power companies, who keep their oligopoly.

Arno A. Evers
August 31, 2012

To my understanding, the by far biggest mistakes are th German feed-in-tariffs, as they prevent, since the 1990s ANY progress in technology development and also the Implementation of New ideas, how to use PV differently.

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Ucilia Wang

Ucilia Wang is a California-based freelance journalist who writes about renewable energy. She previously was the associate editor at Greentech Media and a staff writer covering the semiconductor industry at Red Herring. In addition to Renewable...