Consequences when the world has excess solar panels

A glut of Chinese solar panels has left them half the price of European ones, threatening to bankrupt manufacturers.

China’s newest solar equipment makers include a dairy company and a toy company, examples of the country’s overspending on renewable energy funding that has created a glut that is spreading not only domestically but also in Europe.

Prices for polysilicon, the material used to make solar panels, have fallen 50% and finished panels 40% in China since the start of the year, according to Dow Jones-owned data tracker OPIS. There are already fears of a “green bubble” bursting, a reference to a collapse in prices for green energy equipment caused by oversupply.

BloombergNEF estimates Beijing has spent nearly $80 billion, or about 90% of the world ’s total investment in clean energy equipment manufacturing. The International Energy Agency says the country’s total annual green energy spending has increased by more than $180 billion a year since 2019.

The influx of funding has attracted outsiders to join the fray. Last summer, dairy giant Royal Group announced plans to build a $1.5 billion solar panel plant. “The market potential is huge,” Royal Group said.

It's not just dairy companies, according to data intelligence firm InfoLink, more than 70 listed companies - from fashion , chemicals, real estate to electrical equipment - have entered the solar energy sector by 2022.

For example, Zhejiang Ming Jewelry operates 1,000 jewelry stores. In February, it announced a $1.5 billion investment to build a solar panel factory. Before that, toy company Mubang High-Tech formed a joint venture to build a $660 million solar panel manufacturing facility.

A worker checks product quality at a solar equipment manufacturer's factory in Xi'an, Shaanxi province, China December 10, 2019. Photo: Reuters

The massive investment has created a glut of production and plunging prices. Many established companies warn that the consequences could be dire, with losses and bankruptcy at risk. “The entire industry is heading for a knockout,” Longi Green Energy Technology, one of China’s largest solar manufacturers, said in its August earnings report.

At least 13 companies, including industry leaders in China such as Jinko Solar, Trina Solar and Canadian, have paused capacity expansion plans, according to Taiwan-based market intelligence firm TrendForce.

At the same time, many Chinese manufacturers are trying to offload inventory at bargain prices to Europe – one of the few major markets without tariffs or other barriers to panel imports. This is making European solar developers happy but hurting local manufacturers.

Solar panels are so cheap that they are selling for about half the cost of production to members of the European Solar Energy Manufacturers Association, according to Secretary General Johan Lindahl. About 40% of the panels produced this year by the association’s members are sitting in warehouses.

A Norwegian solar panel manufacturer went bankrupt in August. Carsten Rohr, chief commercial officer of NorSun, the company's only remaining European rival, said it had stopped production in recent weeks due to sluggish sales.

As a result, Europe's dependence on Chinese solar equipment is growing, according to Gunter Erfurt, CEO of Swiss solar panel maker Meyer Burger, which has postponed its expansion plans in Europe and moved production to a new factory in the United States, which receives large government subsidies.

Europe has been hit hard in part because Chinese solar panels have struggled to penetrate the US and India. Barriers in these two markets have led to manufacturers’ consumption forecasts being misread, and their panels have languished in ports and warehouses. The US has been particularly hard-pressed to predict the threat of anti-dumping tariffs on Chinese solar panels.

Part of the oversupply is also coming from Europe. Supply chain disruptions during the pandemic have led to a shortage of solar panels and high prices. European customers placed large orders at the time, and many Chinese manufacturers overestimated demand, according to Matthias Taft, CEO of BayWa re, Europe's largest solar equipment distributor. "We and other companies have placed massive orders for the second half of 2022," he admitted.

Observers say clearing the oversupply may be quicker than expected, as some companies are likely to cancel or postpone expansion plans, while others are closing old factories to replace them with new ones.

In China, Liu Yiyang, deputy secretary-general of the Photovoltaic Association, is urging local governments to put the brakes on green technology investment. In January, the Shenzhen Stock Exchange issued a letter of concern to Suzhou Shijing Technology, a maker of pollution control equipment. It asked where Shijing raised $1.5 billion to build the factory, when its total assets were only $450 million.

In a response, Shijing said 60% of the funding would come from the local government. In its latest quarterly report in October, the company noted that the project was being implemented in an orderly manner.

Phien An ( according to WSJ )

Source link: https://vnexpress.net/he-luy-khi-the-gioi-thua-pin-mat-troi-4676882.html