Uncompetitive Solar Manufacturers in China will not be “Propped Up”

A glut of photovoltaic panels that wiped $30 billion from solar stocks last year is likely to expand in 2012, forcing manufacturers out of the industry, said Bloomberg New Energy Finance’s Chief Solar Analyst Jenny Chase.
Excess capacity cut the price of solar panels in half last year, depressing margins and prompting 15 of the 17 members of Bloomberg Large Solar Index to post quarterly losses in their most recent earnings statements. The index lost as much as 76 percent last year.
“In terms of margins, it’s going to be worse and in terms of companies dropping out, it’s going to be worse,” Chase said in a telephone interview. “The Chinese have made it clear that they don’t intend to prop up uncompetitive manufacturers.”
Germany, the world’s biggest solar market, fitted a record 3 gigawatts of panels in December as developers raced to meet a year-end deadline for claiming higher rates of subsidies. That brought the annual total to about 7.5 gigawatts and stabilized the price of many components that tumbled earlier in the year.
German Environment Minister Norbert Roettgen said Jan. 19 he plans to reduce aid for solar generators each month instead of the current system of twice-yearly cuts because installations have exceeded the government’s targets.
That decision may support demand in Germany during the first months of the year as investors again look to connect up their generators before the new subsidy regime is introduced, Chase said. “The second half could be a lot worse,” she said.