Asia Report: Another Week of Woe for China's Solar Panel Manufacturers

Oliver Wagg, Contributor
November 19, 2012 | 8 Comments

China's beleaguered solar panel makers took another hit this week, announcing either shipment downgrades or job cuts in response to global oversupply and higher production costs tied to recent import tariffs imposed by the U.S. government.

Trina Solar, which has reported a loss for the last consecutive four quarters, slashed third-quarter guidance citing industry-wide oversupply and lower prices. The Chinese solar panel maker now estimates shipments in the third quarter would be in the 375 MW to 385 MW range, down from previous guidance of 450 MW to 480 MW, as margins were squeezed by anti-dumping duties in the U.S. and an inventory write-down.

Trina said in September that it was cutting an undisclosed number of jobs as part of a broader cost-saving measure. This week it was Suntech’s turn to announce job cuts, saying it will reduce three production shifts to one and cut the workforce at its Goodyear, Ariz. solar panel manufacturing facility.

The world's largest producer of solar panels said the rising costs of solar cells increases the cost of manufacturing solar panels in the U.S. Tariffs on solar cells come in addition to tariffs imposed by the U.S. government last year on aluminum frames, another key input for solar panel manufacturing.

"Subsequent to our decision to invest in Arizona, unnecessary upstream trade barriers have made it difficult and more costly to manufacture solar panels in the U.S. In addition, these new tariffs limit our ability to utilize Suntech's advanced solar cell technology imported from China," said Mick McDaniel, managing director of Suntech America.

Travis Hoium writes in the Motley Fool: “It should now be clear that Chinese solar companies are no longer viable businesses as they're currently constructed. Not only are margins so low that it would be tough to make a profit, they all have debt that makes them less competitive than healthier suppliers.”

Hoium has been negative on Chinese solar stocks for some time, but generally has kept his strongly negative opinions limited to those with so much debt that it's unlikely they could ever compete, such as LDK, Suntech and Yingli.

But an earnings report from Canadian Solar, coupled with Trina’s updated guidance leads Hoium to believe "that China's entire solar industry will eventually be bankrupt, or bailed out in some form.”

IN THE NEWS

Sinovel to put 351 workers on leave amid slump in turbine sales: China’s Sinovel, the world’s biggest wind-turbine marker by market value, said it plans to put 351 workers — 12 percent of the company’s total workforce — on leave from 19 November because of an industry-wide slump in sales.

China releases funding for solar projects: China will accept new applications from regional governments for solar project subsidies to support the domestic photovoltaic industry. The certain projects, which belong to the Golden Sun program, will receive a subsidy of 5.5 yuan ($0.88) per watt and must be completed by the end of June 2013, according to a statement on the Ministry of Finance website.

Mongolia to increase renewable energy development: Mongolia plans to increase the amount of energy produced from renewable sources, the country’s President Tsakhia Elbegdorj said Monday. The country expects to produce 20 percent to 25 percent of its electricity from wind, solar and other renewable resources by 2020, Elbegdorj said at the Northeast Asia Renewable Energy Resources Cooperation Forum.

Germany’s Conergy wins bid to build two wind farms in Thailand: Germany's Conergy has won a contract to supply parts and build two solar farms in Thailand with a combined capacity of 21 MW. Thai Solar Energy chose Conergy for engineering, procurement and construction services at its solar parks in Suphan Buri and Kanchanaburi provinces.

Australia brings early end to rooftop solar subsidy scheme: Australia’s federal government has announced the early closure of its rooftop solar subsidy scheme. The closure of the scheme, six months early, is the second time the government has intervened in the program, which was originally intended to end in 2015.

Infigen, Suntech scale back plan for Australian solar farm: Australia’s Infigen Energy and China’s Suntech cut the size of a solar plant proposed for Australia’s New South Wales state to about a quarter of the original plan as they vie for federal funds. The two companies want to develop a 35-MW solar project after failing in an attempt to get a government grant for a 150-MW plan.

Japan domestic solar shipments up 80 percent: Japan's domestic shipments of solar cells and modules rose 80 percent year-on-year in the three months to September after the government started an incentive program for clean energy in the first month of the period. Domestic shipments increased to 627 MW from 348 MW in the same quarter last year, the Japan Photovoltaic Energy Association said.

A DEEPER LOOK

Navigating Australia’s cleantech puberty blues: Australian CleanTech’s John O’Brien writes Australia has all the characteristics of a country that should be leading the cleantech world: excellent research capability; mature financial markets; exceptional renewable energy resources; erratic water supplies and very high emissions per capita. There has certainly been progress over 2012 with the start of carbon-pricing and grant programs, strengthening the foundations that were started with the 20 percent renewable energy target. But with all this effort, cleantech in Australia has only yet reached its teenage years.

India’s $1.4 billion solar plan thwarted by supply delays, dust: Natalie Obiko Pearson of Bloomberg writes India expects half of a planned $1.4 billion of solar thermal power stations will be delayed and some scrapped as U.S. supplies stall and dust clouds diffuse the radiation required to drive generation. Of the 500 MW of projects due to be completed in February and May, only a third of that capacity may be ready on time.

ON THE HORIZON

Bankruptcy beckons for half of tier 3 polysilicon suppliers: The bleak outlook for the global polysilicon industry has been laid bare by the prediction that half of the world's tier 3 polysilicon suppliers face bankruptcy in the months ahead. Principal PV analyst at IHS iSuppli Henning Wicht told pv magazine that while the world's biggest polysilicon producers — OCI, Wacker, GCL Poly and HSC — may continue to expand production by offsetting any associated losses against longer-term gains of expanded market share, smaller players had no such luxury.

QUOTE OF THE WEEK

“The Thai government wants to meet one quarter of the country’s energy requirements using renewable energy sources by the year 2022. This is providing a baseline of support to the development of a solar energy market in Thailand.” — Alexander Lenz, President Asia & Middle East for Conergy

HAVE YOUR SAY

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IN CASE YOU MISSED IT

Nov. 13-19, 2012 Asia Report: Australia Lays Out 2050 Renewable Energy Vision
Nov. 3-12, 2012 Asia Report: Panasonic Freezesz Investment in Malaysia PV Manufacturing
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: Graph via Shutterstock

8 Comments

Kenneth Aaron
November 21, 2012

You would think that someone by now could of figured out the possibility of PV network and power grid in the Mid East and North Africa. This power could be used for desalination and irrigation of the desert for food production. This would be a far better investment than the War Machine Mentality. Water is essential for life and war eliminates life.

Todd Flach
November 21, 2012

Why doesn't the Chinese government simply buy Chinese PV panels and grow their own PV-power utility industry? They need it at least as much as Europe, the US, India, etc. This would take some of the pressure off of building more coal power plants and nukes, and would alos reduce some of the pressure on water resources required for both coal and nukes.

John Nistler
November 20, 2012

Longwatcher, perhaps. But even in regards to commercial installations efficiency and performance matters. Land is not free.

Basically in all semiconductors, small increments in performance, yields and costs can be obtained on a quarterly basis. It requires a concentrated Quality assurance mind set from everyone, especially upper management. I have found that typically if upper management has a personal vendetta against the management of its competitors, lots of things get done that would normally not be done.

But if upper management becomes complacent, then the entire company falters and is "caught off guard". Yes, being blessed has a lot to do with it and even when you do everything right, it does not always mean you have the money and ability to compete when you need it. But not being prepared will definitely hurt you. I note that most of the US based panel manufacturers who are crying about Chinese dumping are based in California. An artificial market supported by a State Feed in tariff.

Tim Dolan
November 20, 2012

Is there perhaps a cost issue. If I understand you correctly, you are saying the panel should be higher efficiency through better production. But I also know that sometimes the cost to get that little bit extra sometimes costs a whole lot more to achieve.

When purchasing panels the basic analysis has to include cost versus efficiency versus area available. If that extra relatively small efficiency would significantly raise the cost by relatively a lot then it would not be a good business decision.

I use the word relatively because it depends on the application. for utility scale, cost and total output are the deciding factors; but for home use cost is balanced by area available; and if for say military or space application, it is balanced by weight and survivability cost being less of a factor for the last.

If however, it is not an issue of cost and the upgrade in efficiency is only a matter of re-tooling or adding a new technique, then it becomes obvious that short-term profits are rearing its ugly head and superseding long-term potential, which is a common occurrence in at least the USA these days. There is also the possibility of some bad luck or mis-management which deprived the company of funds it needs to retool. That can be temporary or can kill a company.

John Nistler
November 20, 2012

Longwatcher, not confusing the issue at all. There are four points different between Sunpower's peak cell obtained and the panels using these cells. Basically over a 5 year period its apparent that Sunpower has not been able to increase the yield of their 23.2% solar cell otherwise they would be able to raise their panel from 19.2% up towards 20%. In addition, there are new panel manufacturing and testing procedures that allow better layout, wiring and placement that also helps to increase panel efficiency.

Essentially there are normal distributions in cell and panel production. By tightening or shifting your distribution you can obtain higher yields at certain efficiencies and thus offer a higher yielding panel. I have 20 years in the semiconductor experience prior to starting my solar company. I am quite aware of semiconductor manufacturing and the engineering and manufacturing improvements that can be done to raise yields.

Manufacturing of solar panels basically is no different then manufacturing of mother boards. You select the parts you are putting together and then wire them together. Improving how you wire helps to improve panel performance as an example. Etching the glass helps to reduce reflection and thus increases efficiency. Incorporating Antireflective glass helps to improve panel efficiency. While the so called cheaply made Chinese product has somehow been able to obtain 16 to 17% solar panels the so called better quality American and Japanese panels have not made significant strides in panel or cell efficiency.

Tim Dolan
November 20, 2012

@john-nistler,
I think you are confusing cells and panels.
A panel with 21% efficiency cells will likely only be around 18% efficiency with the panel as a whole.

So a 23.2% cell will likely produce a 19.2% panel.

Or so I understand it from my research.

John Nistler
November 20, 2012

To me the primary issue has been a lack of Trina and other suppliers in staying competitive through reinvestment and innovation. Sunpower has historically had the ability to build 23.2% solar cells, yet their solar panels have stayed at 19.2% for many years. Trina is still at 14.5% while commercial solar cells are available at 20% efficiency. Lessons should be learned from the semiconductor industry. Flash drives for example are commodity parts, its been the improvement in overall efficiency or higher density that has brought down the price. Lots of flash drive manufacturers who did not maintain clear, precise quality improvement programs fell by the wayside.

Gottlieb Keller
November 20, 2012

It will be a question of time until the Chinese manufacturer will start producing in Africa or in South America.

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Oliver Wagg

Independent journalist with a background in sustainable business and ethical finance, the renewable and low-emission energy sectors, climate-change science and policy and the not-for-profit sector.