Glut of Solar Panels Poses a New Threat to China

[ALS]

China’s biggest solar panel makers are suffering losses of up to $1 for every $3 of sales this year, as panel prices have fallen by three-fourths since 2008.

Keith Bradsher - NYTIMES - October 5, 2012

China in recent years established global dominance in renewable energy, its solar panel and wind turbine factories forcing many foreign rivals out of business and its policy makers hailed by environmentalists around the world as visionaries.

But now China’s strategy is in disarray. Though worldwide demand for solar panels and wind turbines has grown rapidly over the last five years, China’s manufacturing capacity has soared even faster, creating enormous oversupply and a ferocious price war.

The result is a looming financial disaster, not only for manufacturers but for state-owned banks that financed factories with approximately $18 billion in low-rate loans and for municipal and provincial governments that provided loan guarantees and sold manufacturers valuable land at deeply discounted prices. ... [Read More]

[herm]

Now is the time to secure their #1 position, when the competition has been driven out of business

[herm]

"Chinese solar power companies are making some cutbacks. Suntech, based in Wuxi, is temporarily closing a quarter of its solar cell capacity. It will transfer a majority of the 1,500 affected workers to other operations and provide severance payments to the rest.
....

Trina Solar, one of its biggest rivals, also has said it will “streamline its operations” and shrink its work force, but did not provide details.

Trina shares have dropped 85 percent in the last three years and Suntech shares have fallen more than 98 percent in the last five years. Both trade on the New York Stock Exchange.

The modest cutbacks in production barely put a dent in China’s overcapacity problem. GTM Research, a renewable energy consulting firm in Boston, estimates that Chinese companies have the ability to manufacture 50 gigawatts of solar panels this year, while the Chinese domestic market is on track to absorb only 4 to 5 gigawatts. Exports will take another 18 or 19 gigawatts.

The enormously expensive equipment in solar panel factories needs to be run around the clock, seven days a week, to cover costs.

“You want to be up at 80 percent, so they’re half of what they need,” said Shayle Kann, the head of GTM Research, which is a unit of Greentech Media.

Chinese companies have struggled even though a dozen solar companies in the United States and another dozen in Europe have gone bankrupt or closed factories since the start of last year. The bankruptcies and closures have done little to ease the global glut and price war because China by itself represents more than two-thirds of the world’s capacity."

[phoebeisis]

Gee-I really really feel sorry for China.
Anyone here remember Japan-25 years or so ago Japan was sneering at the us-the USA- how unconpetitive and lazy we were-how bad our trade balance was-how Japan was "Buying the USA"-meaning they were being suckered into buying overpriced real estate?
How Japan was going to overtake our economy
How various "Talking heads" were saying -the USA- was in decline
All this absolutely IGNORED inherent problems Japan/Industry/
Plus it ignored the LAUGHABLE prices Japanese were paying for Japanese real estate-on borrowed-from Japanese-money.
Once their real estate bubble burst-Japan was DOA- still is DOA-
China- also has GOV + INDUSTRY overly cozy relationship
Also has overpriced real estate
Now China has a young population-not Japans oldster heavy demographics-
and China has lots of natural resources
So not exactly the same
But they do have an amoral population(poisoning their own babies when they aren't running them over-poisoning our pet food-poisoning our toothpaste-poisoning cough syrup- executing the head of their FDA) I suspect that is a potential disadvantage-not sure how, but their absolutely disinterest in the welfare of anyone who isn't family- might become a real problem as their haves start lording it over their have nots
-good thing for them that they aren't as well armed(as individuals) as we are.

Yeah when is the last time we executed the head of the FDA -or NIH- or CDC- or even a Surgeon General ??

China's chickens will come home to roost-
Cheap labor can cover lots of sins-we'll see.

[ItsNotAboutTheMoney]

Originally Posted by phoebeisis

Now China has a young population-not Japans oldster heavy demographics-

http://upload.wikimedia.org/wikipedi...inapop.svg.png

http://www.ipss.go.jp/site-ad/TopPageData/2010.gif

No, but China has a 1 child policy that'll get them there.

[ALS]

Looks like 3K to 4K workers went on strike and walked out of the Foxcom plant that makes the Apple IPhone5. Foxconn-apple-iphone-china-strike

[phoebeisis]

ALS
Yeah this is the "class warfare" I'm referring to. These workers see-via internet-how other folks live and work.They also see their own elite-in the big cities-LIVING LARGE.
India has had even worse problems- but I think the plants were actually foreign owned and run(maybe by Japanese??) perhaps car plants?

Plus China seems to have no moral ethical grounding. They don't like/love/give a crap about-their fellow citizens. In the USA- we might hate certain of our fellows-certain amount of hate the rich-sneer at the lazy drunken poor-dislike the "Mexicans who steal jobs" "dislike Blacks"but if one of those folks was hit by a car ,especially if it was a child-we would immediately stop and offer aid(as long as you didn't run him over-in which case many would book)
The Chinese-DON'T!!
Cheap wages- yes Word hard-yes Good business people- yes Stress science education -yes
But they seem completely indifferent to their fellow citizens.
Godless Commies-but the Commie party is seen as the new priviledged class-no Confusion ethic anymore(not sure what they is- but it ain't there anymore.
Can that work? They don't even have clans anymore.
Oddest thing because they are so nice-the Chinese immigrants I meet here-nice folks-helpful really nice?

ItNot About- yeah that had slipped my mind-one child will change demographics
But I don't picture China having lots of oldsters like Japan.
Cheap effective meds for chronic illnesses -HBP DM aren't widely available in many places in China- plus I suspect they still smoke heavily which takes a couple of years off life spans
So their OLDSTERS won't live as long as ours
Charlie

[50 mpg by 2012]

Possibly a stupid idea ...

IF one had a big pocket of cash, why not buy some of China's newest surplus solar panal processing equipment at a deep discount, bring the production capability to the US ... and do a slow start-up in a low-cost US facility using deeply discounted Chinese capital equipment.

That is what China did when the US machine tool industry was facing problems in the 1980s.

In the solar panel sector, “If one-third of them survive, that’s good, and two-thirds of them die, but we don’t know how that happens,” said Li Junfeng, a longtime director general for energy and climate policy at the National Development and Reform Commission, the country’s top economic planning agency.

The average cost of electricity from solar panels in China works out to 19 cents per kilowatt-hour, said Mr. Li. That is three times the cost of coal-fired power. But it is a marked improvement from 63 cents per kilowatt-hour for solar power four years ago.

Now what would the installed cost/kw be if you could buy the production equipment for 5¢~20¢ on the dollar?

Just an idea ....

[phoebeisis]

50mpg

I wonder which machines are sooo expensive? What is the tricky part of building those panels?

Of course wages in china are almost negligible relative to ours.
They still make under $1/hr right?
Heck their only competitive advantage is CHEAP LABOR
And of course they have the $$ to buy newest machines-because of CHEAP LABOR.
Any increases on fuel costs-FAVOR us-USA- since it drives up transportation costs.
Chaina should be able to do just fine-selling just domestically-
but if they start to develope HUGE class differences again-WATCH OUT!
Their upper classes won't even PRETEND to care about lesser citizens.
Not sure if the elites would pull the "lets start a war trick" since a war in the NUKE age-
But maybe just trying to whip up on Japan a little( but Japan could become NUKE armed quickly-so..)
We'll see.

[herm]

I'm not sure but I think the equipment used to make panels is similar to the stuff used to make semiconductors.. in any case labor costs have little impact in that manufacturing due to the expense of the equipment.. perhaps the labor of actually assembling and packaging the panels but its probably automated also.

Even the Chinese are getting away from labor intensive manufacturing. Cheaper to automate it.