REC sees boost in Japan but US business in danger due to trade dispute

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Solar panel sales to Japan accounted for 29% of Norwegian solar giant REC’s total solar panel shipments in the second quarter of the year and demand in the region is certain to remain strong, buoying the group’s solar panel division, but the future of its polysilicon operations in the U.S. remains uncertain in view of the ongoing trade row with China.

The company on Monday announced it had supplied 3.8 MW of solar panels to two projects in Japan owned by C-Energy, a subsidiary of Japanese electric utility provider Chubu Electric Power Company.

REC provided a total of 15,324 REC Peak Energy Series solar panels for the plants. They include the 2.5 MW Toyobo Mie plant, located in Yokkaichi, Mie Prefecture, which started operation in July and is expected to generate 2.5 million kWh of electricity annually, making it C-Energy’s largest solar project; and the 1.3 MW Research Institute solar installation in Ohtsu City, Shiga Prefecture, where construction began in July with completion due in December. Toyobo, one of Japan’s top makers of fibers and textiles, owns the land of both installations.

The Fukushima nuclear disaster in 2011 triggered a complete revamp in Japan’s energy policy, putting solar front and center in the country’s reorientation.

"Japan is one of the most important markets for REC in 2013 and we’re thrilled to be selected as the panel supplier of choice by C-Energy. We are looking forward to establishing a reliable partnership with them," said Go Sekiguchi, REC’s representative director for Japan.

While prospects in Japan and the rest of Asia look strong for REC’s panel business, the future of its polysilicon operations in the U.S. remain uncertain due to the continued dispute with China.

China’s Ministry of Commerce last month imposed provisional duties of as much as 57% on solar-grade polysilicon from the U.S. and South Korea. The move is widely seen as a direct response to the U.S.’ decision in 2012 to impose duties of as much as 250% on Chinese PV modules after falling prices resulted in the bankruptcies of a number of U.S. manufacturers.

Solar panel dispute threatening jobs in Washington

According to the Seattle Times, REC Silicon is warning of a "massive blow" to its business if the United States and China fail to resolve the ongoing trade dispute. REC Silicon currently employees 500 workers at its site in the city of Moses Lake.

China’s solar panel producers have to pay a 57% tariff on polysilicon bought from REC and other U.S.-based producers, making it likely that they’ll acquire the raw material from producers in other countries. A final ruling by Chinese authorities on the duties is due in February.

Chinese buyers account for nearly 80% percent of the polysilicon produced in Moses Lake, the Seattle Times reported.

"This is potentially a massive blow to our business," REC general counsel Francine Sullivan told the newspaper. "We’re doing all we can to keep going, but we can’t manage too much longer without government help. We need a political solution ASAP."

Sullivan said the company hopes to avoid layoffs despite the continuing uncertainty.

According to the Seattle Times, REC is able to produce polysilicon at lower cost due to its unique fluidized-bed reactor process, which consumes less energy. Estimated to be the fifth largest polysilicon producer in the world, REC completed a $1.7 billion expansion of its Moses Lake plant in 2010.

REC is planning to spin off its solar and silicon divisions as independent companies in an effort to improve its overall finances and transfer corporate operations for the two units to new head offices in Singapore for the solar business and the U.S. for the silicon division.