We’ve reported extensively on the worldwide solar panel glut which is threatening many leading solar manufacturers.
That glut was at least in part caused by China’s extensive incentives which made it easy for new solar companies to start-up and rapidly expand manufacturing capacity way beyond what the market demanded.
Combined, the country’s 10 largest solar makers doubled production capacity last year, resulting in plummeting solar prices, down 47% to $0.94 a watt, according to Bloomberg Energy Finance.
Now, Chinese solar-panel makers, facing their own problems because of the over-supply, say they’d rather shut their factories, or even their entire businesses, rather than merge or be acquired, Zhang Longgen, CFO for JinkoSolar (NYSE: JKS) told Reuters. It’s against Chinese culture to be acquired, he said.
"The weakest companies should "weed out" about 75% of output capacity so that China has a "reasonable" 20 gigawatts compared with 75 gigawatts estimated by the second quarter of 2013," he says.
China’s Energy Research Institute predicts the country will be down to 15 domestic solar manufacturers within five years.
Longgen believes the likeliest Chinese survivors will be state-owned companies and those whose shares trade on China’s stock exchanges, noting they have enough capital to get through the hard times. They can temporarily shut factories and then open them again when the market recovers, he told Reuters.
He expects solar demand to drop another 10-20% in Q1 2012 from the last quarter of 2011, which would actually be a good thing because it will weed out the weakest companies.
Thus far, casualties in other parts of the world include now infamous Solyndra, based in the US, and Solon in Germany, and many of the leaders such as Germany’s Solarworld and Q-Cells
are reported deep losses.
Those deep losses spurred SolarWorld’s US operation to form a coalition that’s been pursuing a trade complaint against China and is seeking tariffs on solar imports.
Learn more about which solar companies are expected to survive here and here:
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