Oversupply Issues Plague Solar Manufacturers

By Ucilia Wang

General Electric (GE) plans to close its only U.S. solar panel factory because production costs have exceeded sale prices.

The Fairfield, Conn.-based company told the Dow Jones Clean Technology Insight that silicon panel manufacturing at its facility in Delaware, will stop in January.

GE will shutter the factory all together by June. The factory can produce 34 megawatts of solar panels per year and employs 82 people. GE plans to layoff the workers with severance packages.

The move reflects the tough times experienced by solar energy equipment makers worldwide as supply far exceeded demand over the past year. Recession and a big reduction in solar subsidies in Spain - once a booming market - are key contributors.

Some manufacturers have seen prices for their products fall by anywhere from 30% to 50% over the past year.

Some solar company executives say the decline has slowed in recent months as demand picked up, mostly in Europe. But they remain worried about the pace of market recovery.

Earlier this week, Marlboro, Mass.-based Evergreen Solar (ESLR) said it would move panel production from its factory in Devens, Mass., to China next year in order to cut costs.

Earlier this year, BP Solar announced it would close its solar panel factory in Maryland and outsource that work to a contract manufacturer. BP (BP) said back then that it would continue to make silicon ingots, wafers and cells in Maryland.

Last month, BP said it had hired Jabil Circuit to assemble panels at a Jabil factory in Poland.

Comments

[MichaelAK]

So much for Green Tech Jobs even those are going overseas as a fast rate. We need corporate tax, regulator and labor laws reforms if we are ever going to rebuild our manufacturing base. Heck when the promise of the new Green Manufacturing Revolution goes overseas you have a domestic problem that needs fixing at the Macro Level to correct the inablances in cost.

2009 Nov 06 05:20 PM

[rooferguy]

Oversupply - TERRIFIC, bring it on. That reduces the installed price for solar power systems. Lower cost=higher volumes=greater energy savings.

Jobs? The solar industry is creating installation jobs at a feverish pace. If you don't know it, one of the biggest panel factories in the U.S. only employs 200 people. We're creating 10x that many jobs on the installation and services side with cheap panels. And inexpensive, plug & play panels that are easy to install will put even more electricians and roofers to work installing solar.

So the way to create the most net U.S. jobs is to make solar panels as inexpensively as possible in China, not to insist that panels are made -- at a high price -- in the U.S. Because those high-priced U.S. panels won't result in a lot of installed customers (unless we also naively require U.S.-made content, which further distorts the economics).

2009 Nov 06 06:16 PM

[Windsun33]

Not sure I would call it "feverish". Our installs are up, but the problem with installations is that even a fairly large one is only temporary jobs.- a home sized 7KW grid system can be installed in one or two days, mostly with low tech (day) labor. So what we see happening is the better paying jobs moving overseas. On the other hand, this is about the 4th or 5th solar boom and bust cycle we have been through, so what I am expecting in 3-4 years is that about half the solar companies will be out of business, and demand for panels will start to skyrocket, resulting once again in expensive panels. Been there, done that.


On Nov 06 06:16 PM rooferguy wrote:

> Jobs? The solar industry is creating installation jobs at a feverish
> pace. If you don't know it, one of the biggest panel factories in
> the U.S. only employs 200 people. We're creating 10x that many jobs
> on the installation and services side with cheap panels.

2009 Nov 06 09:58 PM

[john s. gordon]

well we can't manufacture anything without losing money.
the installation jobs last a few days & then that's done.
maintenance jobs might pick up some of the slack for a while, if the stuff is cheaply made & breaks often enough.
in autos, we have local-content requirements which help preserve some of our industrial base (like rubber hoses & hose clamps).
should we have local content requirements in solar too?
> jack

2009 Nov 07 09:05 AM

[Robert Castellano]

I've been saying in my blog on SeekingAlpha for a year that overcapacity was a problem.

In September I wrote a press release entitled "Solar crisis set to hit in 2010, 50% of manufacturers may not survive, says The Information Network" You can read it here - hhttp://digitimes.com/print/a2...

So now it has begun.

2009 Nov 07 10:32 AM

[jerrydd]

I've been saying for quiet a while that those companies that can't build solar for under $2/wt retail are going to die.

Oversupply isn't the problem, under supply was allowing many expensive panel makers to keep going. The huge German, etc subsidies inflated the market so bad over 30 yrs the price of panels went up!!

Now it's just seeking it's correct level. But at $2/wt retail, magic things start to happen as PV become competitive in home installs with coal, making a far larger market. Don't forget homeowners pay 2x's as much for their power vs utilities so their profit is 2x's as much, payback in 0% less time. Also the homeowner doesn't have extra land, transmission line, overhead or stockholders costs.

Only separate cell panels take much labor and even then not much. Those sending jobs out of the country are just not being smart to save a few pennies. But thin film is almost untouched by human hands so labor is not a problem.

So too much supply? Bring it on!!

2009 Nov 07 11:03 AM

[Road Runner]

MichaelAK, You are missing a huge part of the labor in solar - the installation labor which is 35% plus of the price of an installed solar system. This work can not be outsourced.

Also, the US is still the number 1 manufacture in the world. The loss of US manufacturing has been far overstated. The news media loves to talk about job losses because it gets people to tune in.


On Nov 06 05:20 PM MichaelAK wrote:

> So much for Green Tech Jobs even those are going overseas as a fast
> rate. We need corporate tax, regulator and labor laws reforms if
> we are ever going to rebuild our manufacturing base. Heck when the
> promise of the new Green Manufacturing Revolution goes overseas you
> have a domestic problem that needs fixing at the Macro Level to correct
> the inablances in cost.

2009 Nov 07 04:44 PM

[Road Runner]

SunPower (SPWRA and SPWRB) does not have an oversupply problem. They will be capacity constrained for the first half of 2010 until new production comes online mid year.

2009 Nov 07 04:49 PM

[Road Runner]

MichaelAK, There is something else inaccurate about your statement. This article only points out how some of the weaker solar companies are closing US solar plants. But, the big, strong solar companies are planning on opening US manufacturing plants because the increase in US manufacturing cost is more than offset by lower shipping costs to their US customers. SunPower is one of these companies.

On Nov 06 05:20 PM MichaelAK wrote:

> So much for Green Tech Jobs even those are going overseas as a fast
> rate. We need corporate tax, regulator and labor laws reforms if
> we are ever going to rebuild our manufacturing base. Heck when the
> promise of the new Green Manufacturing Revolution goes overseas you
> have a domestic problem that needs fixing at the Macro Level to correct
> the inablances in cost.

2009 Nov 07 05:00 PM

[QUINCE]

The bottom line is that unless you create goods, you are feeding on crumbs and your economy, your standard of living, your everything depends on somebody else. That somebody else will establish the standards of safety, quality etc for you, and that somebody else is the MANUFACTURER. This country better wake up and start helping the manufacturing sector with all the adjacent engineering associated to it, or we’ll find out that it can be worst quality that Wal-Mart products. Installation jobs? People, in 2 years the products evolve and will require no installation and there you say by-by to the crumbs that you are content with now.

2009 Nov 07 09:52 PM

[Jigar Shah]

Manufacturing will come to the US as the demand continues to pick up. Factors like currency fluctuations, shipping costs with high oil prices, and working capital (waiting for panels on the water for 6 weeks from China) will cause imports of solar panels to go down and local manufacturing to get stronger. We just have to be patient. The US market was not strong in 2009, but if 2010 picks up due to price reductions and a reduction in utility bullying than you will see local mfg pickup nicely.

2009 Nov 08 01:26 AM

[spiritcraft]

Look at TSL and CSIQ... Both are booked, making money, trade at less than a 10 forward PE (a few lowball estimates skew the consensus down) and are looking to double capacity in the next 12 months. The both have very low cost structures and were not straddled with long-term poly contracts that are higher than market. There are winners and loosers and there are many analyst who group the industry rather than doing individual DD.

2009 Nov 08 08:49 AM

[mitch8107]

No one seems to get the fact that when we buy things that are made overseas then our money goes overseas. This country was built on manufacturing. Our service industry is very important but it can't survive or grow without a strong manufacturing sector.


On Nov 06 06:16 PM rooferguy wrote:

> Oversupply - TERRIFIC, bring it on. That reduces the installed price
> for solar power systems. Lower cost=higher volumes=greater energy
> savings.
>
> Jobs? The solar industry is creating installation jobs at a feverish
> pace. If you don't know it, one of the biggest panel factories in
> the U.S. only employs 200 people. We're creating 10x that many jobs
> on the installation and services side with cheap panels. And inexpensive,
> plug & play panels that are easy to install will put even more
> electricians and roofers to work installing solar.
>
> So the way to create the most net U.S. jobs is to make solar panels
> as inexpensively as possible in China, not to insist that panels
> are made -- at a high price -- in the U.S. Because those high-priced
> U.S. panels won't result in a lot of installed customers (unless
> we also naively require U.S.-made content, which further distorts
> the economics).

2009 Nov 10 08:51 PM