SunLink announces 50 percent cell production cutback, but there is hope17. November 2011 | Industry & Suppliers, Markets & Trends | By: Eckhart Gouras
SunLink PV with its headquarters in Zhangjiagang, China, last week reduced its photovoltaic cell production capacity by 50 percent in light of reduced European demand and better pricing from third party cell suppliers.
According to Zhou Jin Feng, deputy general manager of SunLink PV, costs could be reduced by sourcing from outside cell suppliers rather than using its own product. This shows the margin pressure a Chinese manufacturer like SunLink is under, as its module prices have reached a range of between €0.70 to €0.75 per watt.
There is, however, some good news to report. While 90 percent of the company's revenues came from Europe this year, Zhou sees Chinese projects contributing one third or even more of revenues in 2012. His optimism stems in part from SunLink's new strategic partner and investor, the Irico Group from Xi'an in Shaanxi Province.
Irico has about 15,000 employees - compared to under 1,000 at SunLink PV - with production facilities in multiple locations in China. The company's main business is in the LED and LCD industries, but it also supplies the photovoltaic industry as well with specialized photovoltaic glass.
Most importantly, it is a large state-owned enterprise (SOE), which gives SunLink more financial clout, as well as a better position when negotiating photovoltaic projects with the five leading state-owned utilities in China. As Zhou puts it, providing "solutions" and not just solar panels has become increasingly important in the photovoltaic market, whether in China or key overseas markets. Having a strong SOE shareholder to back you up, can give you the edge in this highly competitive market.
Since the introduction of a new national feed-in tariff (FIT) this summer, the Chinese domestic market is booming. In Jiangsu, this FIT is enhanced by a provincial subsidy, resulting in an overall FIT for projects in Jiangsu of RMB 2.4 per kilowatt hour. This compares to the regular FIT established by the central government of RMB 1.15 for projects completed this year, and RMB 1.00 for projects completed next year.
Zhou sees the Chinese market growing to two gigawatts (GW) this year and 3.5 GW in 2012, a big jump compared to the cumulative photovolaic capacity of under one GW at the end of last year.
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