Suntech Sees Solar Rebound in a Year After ‘Difficult Time’
Suntech Power Holdings Co., the world’s biggest maker of silicon-based solar panels, expects a revival in demand next year after subsidy reductions becalmed markets and cut prices across Europe.
Suntech is braced for a “very, very difficult time” that may push rivals out of business and to curtail capacity, Chief Commercial Officer Andrew Beebe said in an interview yesterday at the company’s headquarters in Wuxi. He said prices for polysilicon, the raw material used to make solar panels, may stabilize after tumbling 62 percent this year.
“Those companies and those sections of the market that weren’t preparing for last year are going to be in trouble,” Beebe said. “Silicon is finally finding its bottom. Once it’s stabilized, our pricing will be stabilized. And I think our prices will go up, when the available capacity really goes down, because companies will take capacities off line.”
The comments help explain why Suntech alone among Chinese solar manufactures confirmed forecasts for shipments and margins this year as rivals including Yingli Green Energy Holding Co., Renesola Ltd. (SOLA) and China Sunergy Co. slashed their expectations.
Suntech on Nov. 9 forecast shipments to rise more than 15 percent in the third quarter compared with the second, in step with its Aug. 22 guidance. Its gross margin will be 13 percent, at the high end of the range, it told analysts to expect.
“We’re ready to go through that very, very difficult time,” Beebe said.
Polysilicon Supply Glut
The spot price of polysilicon has been plummeting as manufactures led by Hemlock Semiconductor Corp. and Wacker Chemie AG (WCH) lifted production, according to data from Bloomberg New Energy Finance.
The polysilicon supply glut has been replicated across the supply chain for solar cells, covering wafers used to make cells, the finished cells themselves and modules that can be fitted outside for producing power. Germany, France, Spain and Britain have reined in subsidies for solar energy. The two factors together gutted margins for solar manufacturers.
“Seasonal demand lows in the first quarter always, and additionally you have Italy and France pushing way down because they are changing their tariffs,” Beebe said.
He said he expects those nations and others elsewhere in the world to affirm goals for producing more clean energy, leading to a recovery in the third quarter of 2012. For now, credit concerns in Europe have stalled projects and prompted Suntech to reject some orders.
“What’s happening in Europe, the micro challenges on the euro, have a real impact on the industry, and in particular it makes difficult for large projects to get financed,” Beebe said. “We have turned away from a lot of businesses because of credit issues that we didn’t feel comfortable with. That allows us to stay more physically consummative.”
Suntech is working to supply modules to at least one gigawatt of projects under pipeline in Africa, Beebe said. Agreements haven’t been finalized. “We won’t be lead developer, we’ll do it as minority joint venture partner with our customers,” said Beebe.
He described China as an “exciting” market. “The growth will surprise a lot of people,” he said. He expects the country to add as much as 4 gigawatts of installation capacity in 2012, more than doubling a 2-gigawatt forecast for this year.
The Wuxi, Jiangsu-based company is shifting weighting away from Europe and toured other regions to achieve geographical diversification.
“That gives us the opportunity to be quite balanced when things are very difficult in one region or another,” said Beebe. All the markets that are committed to solar are attractive, if they each have at least 1 gigawatt of projection a year, he said.
To contact the editor responsible for this story: Reed Landberg at email@example.com