29.05.2012
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Photovoltaics

Chinese PV tigers without a home

While people remain concerned about the financial situation of Western PV manufacturers, their Chinese competition is no better off. Now, major Chinese PV manufacturers have come together to found their own coalition against protectionist measures. Without a domestic market, they too may go under.

Suntech's headquarters in Wuxi, China. The company says the Chinese PV sector may not be around much longer if the EU and the US both impose import duties.
 - Source: Suntech
Source: Suntech

Last week, China's four biggest panel manufacturers joined forces to found its own alliance in Shanghai – the Solar Energy Promotion Alliance or SEPA, not to be confused with the Solar Electric Power Association of the US, which has the same acronym. The Chinese Alliance was founded partly to combat import duties that the United States plans to impose on panels from China and partly to open new markets. SEPA would be well advised to start at home. The Chinese photovoltaics market is still not a major buyer, and Chinese manufacturers currently have tremendous surplus capacity. They are therefore forced to sell their panels below cost in Europe and the US.

In mid-May, the US Department of Commerce announced its plans to impose tariffs possibly starting at 31% because it believes the Chinese are selling below cost. Specifically, Chinese manufacturers have received tremendous loans from their government at very low interest rates. Nonetheless, this cheap funding has not solved the structural problem of excess production – and now, there is talk about the EU imposing similar levies. Germany's SolarWorld was the main plaintiff behind the case in the US, and it now says it aims to file suit with the EU. At the firm's general meeting of shareholders, CEO Frank Asbeck said he believes that the Chinese government may lose patience with these firms if they do not become profitable soon: "The question is how long the Chinese state will continue to provide this support."

SEPA currently consists of Suntech Power, Canadian Solar (which has its headquarters in Ontario but mainly does business from China), Trina Solar and Yingli Green Energy. At the moment, Chinese firms are under tremendous time pressure because they continue to post losses. Last year, Suntech – the world's largest solar firm – posted a loss of around $1 billion. In the first quarter of 2012, sales revenue dropped by a third – and by more than half compared to Q1 2011. In Q1 2012, the firm posted a loss of 119.2 million dollars, nearly twice as much as in the fourth quarter of 2011. Suntech estimates that the levies the US plans to impose (which will take effect retroactively for 90 days) will cost it around 19.2 million dollars. At the end of the first quarter, the company had an overall debt of around 1.6 billion dollars. On Thursday, Suntech told Reuters that a decision by Europe to impose levies could be lethal to China's PV industry. Last week, Trina Solar also released its financial figures for Q1 2012, and the firm remains in the red. (Heiko Schwarzburger / Craig Morris)

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