The bankruptcy of Chinese solar-panel heavyweight Suntech may be an omen that the sun is about to set on super-cheap solar energy.
The world’s biggest solar module manufacturer is on the verge of collapse under a pile of more than $1 billion in debt. The problem is not that the market for solar panels is weak. The problem is that there is too much competition among manufacturers of panels, which has driven prices down to unsustainably low levels.
As Suntech’s hometown tries to bail out the company, its woes are pointing to what could be ahead for other firms operating in the solar sector — and for those who were looking forward to buying cheap solar panels for their homes and businesses.
Todd Woody explains at Quartz:
The Suntech saga is being watched closely as a bellwether for the global solar industry. Fueled by cheap government loans, Suntech, Yingli, Trina and other photovoltaic panel manufacturers ramped up production in recent years, sending panel prices plummeting 75% and capturing a large share of the worldwide market. China is now home to about 80% of global solar module manufacturing capacity. The Chinese solar expansion set off a boom in Europe and the US as installers took advantage of cheap solar panels to expand their business. The collapse of Suntech and other Chinese manufacturers could leave installers like SolarCity on the hook for hundreds of millions in warranties. Having helped build a global solar industry in less than a decade, the question now is whether the Chinese government will engineer its contraction to shrink capacity and allow the surviving companies to thrive.
How many survivors will be left standing around the world? Forbes brings us this prediction from GTM Research:
A huge bumper crop of solar panels already has caused a sharp decline in their prices and bankrupted many manufacturers worldwide over the past two years. Now a research report released Tuesday says another 180 solar panel makers will likely go out of business or be bought by 2015.
Nearly half of them — or 88 companies — will shut down factories in countries that have become too expensive for producing solar panels, namely the United States, Europe and Canada, said GTM Research. The report looks at over 300 solar panel makers to determine their chances of survival.
The solar business of German company Bosch is among the casualties. From the AP:
Bosch said that it will stop making products such as solar cells, wafers and modules at the beginning of next year. It will sell a plant in Venissieux, France, and is abandoning a plan to build a new plant in Malaysia.
The solar energy division, which employs about 3,000 people, lost around 1 billion euros ($1.3 billion) last year. The company said that, despite efforts to reduce manufacturing costs, it was unable to offset a drop in prices of as much as 40 percent.
If the breathless industry analysis is to believed, an era of super-cheap panels is about to end. That’s a bad thing: Cheap solar panels have been helping homeowners and businesses disconnect from coal, nuclear, and gas power plants. But MIT Technology Review argues that, in the long run, it could actually be a good thing.
The Chinese government helped finance a massive expansion of the solar industry, helping to create a glut of solar panels — and leading to rapidly reducing prices for solar. But now it has let the main subsidiary of its most prominent solar panel manufacturer, Suntech Power, go bankrupt.
That could be a good sign for the solar industry and for innovation. We need more companies to fail to reduce oversupply, stop prices from plummeting, and allow companies to start buying more equipment and implementing new technologies that are needed long-term for solar to compete with fossil fuels.
So, that’s what some people think the collapse of Suntech means.
