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Crisis on global PV market continues

Up to now, it has mainly been North American and European PV firms that faced bankruptcy, but the crisis now seems to slowly be extending to China.

 - Workers involved in the screenprinting of solar cells at Suntech's plant in Wuxi. In 2011, the firm posted record losses. Photo: Suntech
Workers involved in the screenprinting of solar cells at Suntech's plant in Wuxi. In 2011, the firm posted record losses. Photo: Suntech

The PV sector in Germany continues to struggle. Solarhybrid, which recently made news by taking over Solar Millennium's CSP pipeline in the United States, has now announced that it will lose millions because its solar farms currently in the pipeline for Germany will no longer be profitable once new feed-in tariffs take effect, probably starting on April 1. Solarhybrid is one of Germany's largest project developers. An investment firm, Murphy & Spitz, has also announced that it will be discontinuing the funding of startups in the renewables sector in Germany in light of the proposed legal changes.

Within just a few days, shares of Solarhybrid plummeted from around six euros to one euro. The firm says it sees no way of completing, for instance, its major project in Neuhardenburg, which was to have a capacity of 150 megawatts. The project received an initial construction permit dated on December 16, 2011, but further planning and permitting will take at least seven months. Construction was therefore scheduled to start in mid-2012, with the array being connected to the grid at the end of the year.

This project is only one that the company will have to at least partly write off, and the firm says it faces around 7.5 million in costs already incurred for this single project. Then there is the roughly 4 million euros already invested in large projects in Belling, Allstedt and Fürstenwalde, all of which would not be profitable under future feed-in tariffs. As a result, company management says financing might now be difficult for the takeover of Solar Millennium's US business.

Up to now, it has mainly been western cell and panel manufacturers who have suffered financially – not project developers, who could continue to work with Asian imports. Indeed, falling prices meant that the German market boomed at around 7.5 gigawatts in each of the last two years. During that time, former German global market leader Q-Cells has been pushed to the brink of financial disaster. At the beginning of March, its CEO Nedim Cen once again had to ask shareholders to forgo share value in order to forestall bankruptcy. Loans were converted into shares for creditors, with former shareholders now only owning five percent of current stock. The deal was proposed at an extraordinary shareholder meeting and is expected to be voted on in July at the next extraordinary general meeting. Cen says it is not clear how the cuts in German feed-in tariffs will affect his firm, but he hopes to have restructuring completed by the fall and return to the black in 2013.

Suntech in trouble

Frank Asbeck, CEO of Germany's current leading solar firm SolarWorld, has been fighting the Chinese indirectly via his US subsidiary and says that "the Chinese competition throws their goods onto the market at prices that do not even cover variable costs. The industry in China falls back on large state loans – that is the benefit of having a central state-planned economy." Nonetheless, China's Suntech reported a net loss of around a billion US dollars for fiscal 2011. While the Chinese panel manufacturer increased sales, it was apparently selling at a loss.

In the fourth quarter alone, the firm posted a net loss of 136.9 million US dollars – compared to 358 million dollars in profits in Q4 of the previous year. In 2010, the firm made a profit of 236.9 million dollars. Even sales, which grew by eight percent in 2011, plummeted in the fourth quarter of 2011 to a level of third less than in Q4 2010. Overall, the firm sold around two gigawatts of solar in 2011. Its main market is Germany, and the firm expects its sales to drop by an additional 30 percent there this year. (Heiko Schwarzburger / Craig Morris)

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