Solar Manufacturing’s New Strategy: “Co-opetition”

The current crisis in solar manufacturing is leading to some novel economic strategies. Pure manufacturing is dead, say many solar companies: it’s time to diversify.

In a conversation last week at Shanghai’s SNEC Power PV Expo, Eric Yuan, marketing director at Phono Solar, discussed the company’s recent strategic agreement with Suntech Power, the world’s largest crystalline module maker. The agreement will apply largely to the Chinese market, Yuan said, and will lead to joint investment, development and construction of large-scale solar projects.

“We’ll jointly seek opportunities to develop solar farms,” said Cai Jibo, president of Phono Solar, in a statement. “The partnership will make our advantages complementary.”

Each company’s strategy is interesting when viewed in light of an oversupplied, cut-price market. Essentially, while Suntech seeks to reduce its inventory levels, Phono Solar is looking to diversify into investment in solar projects and project development. “Purely producing modules faces intensified competition and irrational pricing,” said Jibo. Phono Solar plans to develop 50 MW of solar farms this year in China’s eastern provinces ofJiangsu and Shandongand the northwestern region of Xinjiang. The Nanjing-based company also plans to develop solar projects in the U.S. and Greece.

Phono Solar’s main competition, Yuan said, comes largely from other Chinese manufacturers. But the company’s strategy seems to be to join them rather than trying to beat them. Phono Solar also recently signed a cooperation agreement with Golden Concord Holdings Ltd (GCL), another Chinese solar manufacturer, to cooperate in terms of supply and industrial chains and photovoltaic plants. The agreement was announced on the day when the U.S. released its preliminary determination in the anti-dumping investigation into imported Chinese solar cell products. The president of GCL, Zhu Gongshan, said that the association of the two strong companies at this time had important strategic significance. In facing severe market challenges, Phono Solar said in a statement, domestic Chinese companies are moving from competition to “co-opetition”.

The U.S. imposition of a 31-250 percent tariff on Chinese solar cells has given rise to additional coping strategies. For example, Chinese manufacturer Jinko Solar told the New York Times that it is considering moving some of its production to Canada, where it already has a factory.  The company said it would be able to ramp up production for the U.S. market to match its current levels in China within a matter of months.

And the China Daily newspaper reported today that Chinese solar manufacturers are developing third-generation PV technology, not made from crystalline silicon, which may prove to be a way to avoid U.S. import duties. The new technology combines purified silicon (from solar furnaces), sun-tracking technology, light concentration and integrated high-concentration photovoltaic systems, the newspaper reported.

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Tildy Bayar is a journalist focusing on the energy sector. She is a former Associate Editor on and Renewable Energy World magazine.

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