Hard Times Ahead For Chinese PV Makers As E.U. Cuts Subsidies

Date:2011-11-10houhaizhen  Text Size:

November 10 -- Chinese exporters of photovoltaic (PV) equipment, which had already reported dismal third-quarter earnings, may have to brace for tougher times ahead as several European countries had decided to reduce subsidies for the PV industry, reports 21cbh.com.

Li Yichun, vice president of the China Industry-University-Research Institute Collaboration Association New Material Commission, predicts that half of the PV equipment makers will have to cease operations in 2012 should the E.U. go ahead with the move to lower PV subsidies.

Europe is a major consumer of PV products, with Germany and Italy accounting for more than 50 percent of the market.

Germany, the largest importer of Chinese PV products, announced that it would lower subsidies by 15 percent in 2012. Following the lead of Germany, Italy, the second-largest PV market globally, had announced plans to reduce subsidies next year.

According to Valerio Natalizia, chairman of the Italian Photovoltaic Industry Association, the country is expected to have PV installed capacity of 12.5 gigawatts by the end of 2011. Natalizia predicted industry growth in 2012 to significantly slow, with newly installed capacity of 2.5-3 gigawatts.

The heated debates taking place regarding the reduction of subsidies had undermined the confidence of PV producers, according to the report.

In addition, the U.K.'s Department of Energy and Climate Change said the U.K. will reduce its rebate from 43 pence per kilowatt hour to 20 pence per kilowatt hour for small systems.

According to China Securities, Germany is experiencing a rapid increase in PV insalled capacity since the beginning of October, since the subsidy cuts will take effect in 2012. Such a rapid increase will mainly benefit China’s second-tier PV equipment makers, added China Securities.

Since the second quarter, global PV prices had fallen, with a significant plunge in the prices of crystalline silicon photovoltaic batteries and components.

The average selling price of polysilicon batteries had fallen to $35 per unit in early November, compared to $100 per unit at the beginning of 2011. It was reported that the breakeven cost of some of the small and mid-sized domestic makers was $60 per unit.

Shenzhen Topraysolar (002218.SZ) reported loss of 0.0838 yuan per share in the third quarter, while sales and net profit fell 11 percent and 160 percent year-on-year, respectively.

PV makers with capacity of less than 100 megawatts will enter into bankruptcy proceedings, while those with capacity of more than one gigawatt will survive, added Li.

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