The solar cell industry could be a bubble

Thread Content

The ten domestic solar manufacturers that are listed overseas, along with other Chinese solar manufacturers that have suddenly emerged as key players, constitute an important force in the international photovoltaic industry. As for the future prospects, Han Fei, the head of the EU’s China Energy and Environment program, concludes that in the long term, the supply of products in the solar market will exceed demand. However, leading manufacturers such as Wuxi Suntech Power (STP.NYSE) and Changzhou Trina Solar (TSL.NYSE) do not agree with this view. 　　At the Second China International New Energy Summit held, Han Fei revealed that despite continued strong demand in the international market, thanks to an increase in overall production capacity, global demand by 2010 would be 4.2 GW, while production would reach 14 GW. 　　He said that in 2006, the top 5 global markets were Germany, Japan, South Korea, the United States, and Spain, with Germany accounting for 51% of the market share, while the other countries and regions accounted for 21%, 14%, 10%, and 4% respectively. One thing worth noting is that although Germany’s new installation capacity was 1150 megawatts and the area covered by new solar panels amounted to 675,000 square meters, the growth rate of Germany’s photovoltaic market in 2006 was zero. The projected annual growth rates from 2007 to 2010 were also not high, ranging from 1265 megawatts to 1610 megawatts, with an annual growth rate of only 10%. 　　According to his research, the Spanish market holds greater potential, with an annual growth rate of around 60%. \"Spain hopes to exceed 200 megawatts by 2010, but it now seems necessary to revise the plans; this figure will definitely be higher, with an estimated 319 megawatts by 2009.\" ”The Japanese market represents one-third of the German photovoltaic market’s capacity, but its development is not very steady; “the United States is different, with its annual solar capacity increasing by more than 50% each year.” 　　He suggested that if the targets for each continent are added together, the cumulative market capacity in 2010 would be 20 gigawatts, with an annual growth rate of 20% to 30%, resulting in a value of around 20 billion euros. 　　Han Fei is particularly concerned that the rapid increase in downstream production is driving the entire solar photovoltaic industry into a situation of excessive competition. 　　However, SunPower clearly does not agree with the statements made by this EU representative. Shi Zhengrong, the company’s chairman and CEO, told reporters yesterday that whether there is an oversupply depends on costs and prices; “if costs go down, then there will be no problem selling whatever amount of products there is.” Zhang Yi, the company’s financial director, said that in fact there is an oversupply among the polysilicon manufacturers at the upstream level. “Many more companies have entered the field of upstream polysilicon production, and this is good for us. With an ample supply of silicon at the upstream stage, prices will drop, and our costs will naturally decrease as well.” 　　Gao Jifan, chairman of Trina Solar, said that since 2007, there has been a high demand for solar cells and modules. The supply of polysilicon at the upstream level will be somewhat tight, but in 2008 some large polysilicon manufacturers will release some of their production capacity, which will ease market demand somewhat. “There is indeed fierce competition in the market, but it depends on how each company operates.”