The company says it will completely shut the solar panel manufacturing facility down in the first quarter of this year, due to reductions in European incentive schemes and the lower manufacturing costs present in regions like China. It added that in December, it experienced a 10 percent decrease in average selling prices from the beginning of the fourth quarter.
"As industry selling prices continue their rapid declines into 2011, panel manufacturing in Devens, either fully or partially, is no longer economically feasible, consequently requiring a complete shutdown of the facility," President and CEO, Michael El-Hillow states.
He continues: "While overall demand for solar may increase, we expect that significant capacity expansions in low cost manufacturing regions combined with potential adverse changes in government subsidies in several markets in Europe will likely result in continuing pressure on selling prices throughout 2011.
"Solar manufacturers in China have received considerable government and financial support and, together with their low manufacturing costs, have become price leaders within the industry. While the United States and other western industrial economies are beneficiaries of rapidly declining installation costs of solar energy, we expect the United States will continue to be at a disadvantage from a manufacturing standpoint."
The news will come as a blow to the industry and contradicts many analysts assertions that manufacturing bases are moving away from Asia to become more localized.
Bank Sarasin points out the weakness of the euro currently puts European production locations in a more favorable position than China. As a result, Matthias Fawer, vice president of the bank’s sustainable investment sector tells pv magazine most of the big module manufactures will start to set up production bases in locations other than China. "It makes more and more sense to be close to your customers," he says. "When we look at the really big players and I guess this will be a kind of consolidation phase in the next coming two years size matters in terms of mass production, so we believe they [the big manufacturers] are going to install production bases in at least two to three markets, i.e. Asia, Europe and the U.S."
IMS Research however, feels there is a continued shift towards Asia. Sharma says, "There are certain parts of the supply chain which will be located near the manufacturer, but in terms of modules its still going to be much cheaper to manufacture in Asia and have a global logistics network. So we see production going more and more towards Asia. China will be the main hub, although there is manufacturing in other regions."
Evergreen Solar will reportedly continue to operate its high temperature filament plant in Midland, Michigan and its wafer facility in Wuhan, China. With approximately 75 megawatts of installed wafer capacity in Wuhan, the company says it will continue to supply its outsourcing partner with wafers for conversion into its branded solar panels.
The closure of the companys Devens facility will result in non-cash charges of around USD$340 million, associated with the write-off of existing building, facilities and equipment. Evergreen says that around another USD$150 million of intangible and cash-related prepayments associated with various silicon contracts are under review, in order to determine whether additional non-cash charges will be required. These charges are expected to impact both the fourth quarter of 2010 and the first quarter of 2011.
Additionally, the company says it expects to incur approximately USD$15 million of costs associated with employee severance and out placement services, facility decommissioning and other costs required to close the facility. These cash charges are expected to be incurred over a twelve month period. Overall, however, it believes that a complete facility shutdown will help preserve cash and facilitate its wafer strategy.
Evergreen goes on to say that development activities associated with its industry standard size String Ribbon wafer have progressed "substantially" in the second half of 2010, resulting in the production of more than 60,000 wafers manufactured using modified existing quad ribbon furnaces. "These wafers are performing comparably to those produced using the companys existing furnaces in Devens and China," it says in a statement. Consequently, 10 prototype furnaces will be installed this year, with the company beginning production on industry standard size wafers "in much greater quantities" this quarter. Pilot production of approximately 25 megawatts is expected to begin by the fourth quarter of the year.
El-Hillow adds: "We have expanded our discussions with established solar companies in low cost regions and have provided samples of our industry standard wafers for their evaluation. Preliminary results have been positive and we have also begun in-depth negotiations to obtain significant financial support for our wafer manufacturing expansion on terms similar to what we received for our current wafer facility in Wuhan.
"Initial interest is high as we have shared the early results of development with potential partners. Our future expansion will be based on the industry standard size wafer, which is central to our strategy of manufacturing the lowest cost wafer, in an industry standard form factor, and providing a wafer that would enable the lowest cost solar panel utilizing multi-crystalline silicon wafers."