Energy

Alt-Energy Watch: Italian, Chinese Solar PV Firms Expanding in the Face of Oversupply (FSLR, GE, JASO, STP, TSL, DQ, WFR, ENLAY, SHCAY, STM)

Predictions that oversupply of solar PV modules will push down prices and margins in 2011 apparently have no impact on decisions to continue building additional manufacturing capacity. Wafer makers in Asia expect to nearly double crystalline silicon wafer capacity by the end of this year, and an Italian firm is building a new thin-film plant that could grow production to nearly 1,000 megawatts.

First Solar Inc. (NASDAQ: FSLR) is the world’s leading maker of thin-film solar modules with an annual capacity of around 1,400 megawatts. A few competitors have emerged, including General Electric Co. (NYSE: GE), but First Solar’s position in the thin-film market is essentially unchallenged. Unless one counts the falling cost of crystalline silicon wafer-making and the huge investments planned by the leading providers, which will drive costs down even more.

Chinese wafer-maker GT-Poly Energy Holdings Ltd and Korean maker OCI Co. expect to nearly double polysilicon capacity this year to about 88,000 metric tons even though prices fell by about 32% in the second quarter of the year. Solar module makers like JA Solar Holdings Co., Ltd. (NASDAQ: JASO), Suntech Power Holdings Co., Ltd. (NYSE: STP) and Trina Solar Ltd. (NYSE: TSL) are expanding module manufacturing capacity and JA Solar is also boosting its output of polysilicon this year in an effort to grab market share.

Daqo New Energy Corp. (NYSE: DQ), China’s fourth-largest polysilicon maker, is building a new plant to produce 3,000 metric tons in addition to the 4,300 metric tons it already produces. These increases far outstrip planned expansion by non-Chinese wafer makers like MEMC Electronic Materials Inc. (NYSE: WFR) and Norway’s Renewable Energy Corp.

The bet here is that the crashing prices came as a result of cuts to government subsidies in Europe, which caused orders for new panels to tumble. But now that the market has had a chance to absorb and react to the cuts, market conditions look to be improving.

Italy’s energy firm Enel SpA (OTC: ENLAY) agrees. The company is joining forces with STMicroelectronics N.V. (NYSE: STM) and Sharp Corp. (OTC: SHCAY) to build a 160-megawatt capacity thin-film plant in Sicily. Capacity is expected to rise to 480 megawatts by the end of 2014 and could reach 1,000 megawatts if demand warrants. Competing directly against First Solar in Italy does not appear to be the wisest course, but Enel does have a downstream component to absorb output from the new plant, which will reduce the company’s reliance on Chinese suppliers.

There will be more jostling in the the solar PV sector in the months to come and the ability of U.S. and European solar PV makers to compete with their Asian counterparts on price will be sorely tested. We’ve written before about possible consolidation in the solar industry and these big expansions by some of the world’s largest firms are likely to speed up that consolidation.

Paul Ausick

Want to Retire Early? Start Here (Sponsor)

Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?

Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.

Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.

 

Have questions about retirement or personal finance? Email us at [email protected]!

By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.

By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.