EU PVSEC: Doors close on price war09. September 2011 | Global PV markets, Markets & Trends, 26th EU PVSEC, Top News | By: Hans-Christoph Neidlein/Jonathan Gifford
Cold winds off the harbor blew hard as the 26th EU PVSEC closes in Hamburg. Visitor numbers were stagnant and many reported slow business and observed massively slashed module prices.
During the week-long trade fair, according to Goetz Fischbeck from BHF Bank, falling prices was the major story.
Due to slow demand and high inventory levels, Chinese Tier 1 manufacturers lowered their prices during the show from 0.89 euro cents per watt peak (p/Wp) on the Monday to 0.76 p/Wp by Thursday. By the final day of the show, Tier 2 manufacturers were selling their modules below 0.70 euro cents p/Wp.
At the first business forum held at EU PVSEC, Chinese manufacturer LDK's Stuart Brannigan said that he believed that many integrators were waiting for prices to hit rock bottom before committing.
BHF’s Fischbeck, in his analysis, continues that at these pricing levels, for 2012 deliveries, "all top manufactures from China agree that prices for modules will be below 0.70 euro cents p/Wp," which is less than breakeven prices. European manufacturers may also suffer under these price pressures.
"The shakeout of the photovoltaic manufactures has just begun," concludes Fischbeck. "Only the companies with the strongest balance sheets that can endure potentially two years with significant losses stand a chance to survive."
Companies are currently reorganizing operations to reduce costs. Conergy announced today that it will shut down its wafer and cell operations in Germany, affecting around 300 workers.
German equipment manufacturers haven’t been spared the pain. At the beginning of the week, a report by the German equipment manufactures association (VDMA) has shown orders in third quarter of 2011 have fallen year-on-year by 56 percent.
"I’m optimistic that orders will pick up again soon," Peter Fath, spokesman from the VDMA photovoltaic section and CTO Centrotherm told pv magazine. Manz also reported that while orders were not flowing in, good interest was shown in its Copper Indium Gallium (di)selenide (CIGS) thin film turnkey line.
Fischbeck is less optimistic for the German equipment suppliers, because they are facing increasing competition. "Chinese equipment suppliers have been able to capture up to 30 percent market share with the Tier 1 manufacturers from China and even higher shares with Tier 2 and Tier 3 manufactures."
Jim Bray from Plantation
Friday, 09.09.2011 18:16
The price war that is occurring in the solar panel manufacturing industry reminds me of the price wars in the telecom sector back in the 1990s that drove the cost per minute for telephone call from 10 cents a minute down to 2 cents a minute. It was a race to the bottom of profitability. There appears to be an over supply in demand for PV panels that is contributing to the problem. I am concerned that Chinese companies are dumping product on the market to drive consolidation. The fly in their ointment is that the Chinese banks are starting to fill the economic pressure the rest of the bank world is feeling. As the price war continues I got a feeling that around March of 2012 Chinese solar manufactures may be unable to continue to do business because the banks have cut their lines of credit. How the government owned facilities will operate is a big question. Who will cover the warranty on PV panels sold by these companies that are out of business is a big question. A lot of the contraction is due to poorly written business plans that reflect the true profitability potential of commercial solar farms. Investors need to see a clear road map to profitability based on existing solar farms and their current financial performance. Investors are looking for transparency in to commercial solar projects that they do not understand.
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