Solar firms seek fresh pastures as Spanish construction bonanza ends
THE GLOBAL solar energy market has had a tough year. The lack of funding in a difficult economic climate has been exacerbated by the collapse of demand from the Spanish market following the imposition of much less generous feed-in tariffs (PE 9/08).
Spain had been the world's leading market, accounting for nearly half of the 5.5 gigawatt (GW) global increase in photovoltaic (PV) solar capacity in 2008, according to the European Photovoltaic Industry Association. But market oversupply caused by over-generous subsidies resulted in a government reappraisal of feed-in tariffs, which it cut by more than 25% in 2009. It also imposed a 500 megawatt (MW) cap on new builds this year. Consequently, companies with heavy exposure to the Spanish market have suffered.
For example, Chinese PV panel producer Yingli, which derived around 40% of its revenues from the Spanish market in 2008 – and another 40% from Germany, another weakening and increasingly mature market – has felt the full force of the downturn. Second-quarter revenues dropped by 24% compared with the same period a year earlier to around $220m, contributing to a net loss of around $57.6m compared with a profit of $30m a year earlier.
Falling global demand, exacerbated by the collapse of the Spanish market, has had wider ramifications for manufacturers, triggering a temporary glut of PV components, resulting in a fall in prices. In Germany, this has led to allegations by some local companies, including Conergy and Solarworld, that the cheap prices offered for components by their Chinese rivals amount to dumping on the German market. The German solar industry association is investigating the claims, which Chinese firms have refuted.
Manufacturers are now eyeing growth in younger markets with big potential, such as China and the US. Yingli says it is now starting to ship larger volumes again as a result of an improved credit environment in PV markets beyond Spain and Germany.
The Chinese market is likely to expand fast, albeit from a small base. Steven Chan, chief strategy officer at China's Suntech Power Holding, claims China's solar PV market could grow by 400 MW in 2010 compared with 100 MW this year. Government renewables incentives are benefiting Suntech and its rivals and have also provided opportunities for foreign firms such as First Solar of the US, which said in September it had won a contract to build a 2 GW solar farm in Inner Mongolia – one of the biggest yet planned.
The US is the market where many hopes are being pinned in the short term. The market added 342 MW of new solar capacity in 2008 and should beat that narrowly in 2009, adding around another 350 MW, despite the economic downturn. Chan has high expectations of the US market, following the government's introduction of financial incentives; he says new capacity installations could triple in 2010.