Suntech May Buy Factory to Feed Solar Demand Growth

Wuxi Suntech Power Co. is considering the purchase of a solar cell and module factory outside China to feed growth in demand for the technology.

Suntech plans to add capacity of 500 megawatts to 1 gigawatt and is looking at “different options” in Southeast Asia, North America and South America, Chief Executive Officer Eric Luo said in an interview in Munich. Its competitor, Trina Solar Ltd., expects a rush of orders for new projects in the U.K. before subsidies are reduced and is considering whether to buy new panel-making equipment.

“It’s a good time to do the investment,” Luo said in an interview on the sidelines of Intersolar, the biggest solar trade fair, which finishes tomorrow. “Everyone sees a clear trend for the growth.”

Solar companies are recovering from years of oversupply that depressed the cost of the technology. China and Japan have extended support for solar panels, absorbing an inventory glut that had hurt the earnings of manufacturers.

Suntech, Trina and SMA Solar Technology AG, a German maker of inverters used in most solar plants, said in separate interviews that they’re confident China will install at least 14 gigawatts of new solar-power projects this year. About 37 gigawatts of solar panels were installed last year worldwide, according to data compiled by Bloomberg.

That has already spurred construction of new factories. Canadian Solar Inc. will build a plant for photovoltaic cells in China in partnership with GCL-Poly Energy Holdings Ltd., the country’s largest polysilicon and wafer producer.

Factory Purchase

Acquiring a plant outside China may help Suntech, which is owned by Hong Kong’s Shunfeng Photovoltaic International Ltd., circumvent U.S. anti-subsidy duties against Chinese producers that were set, in Suntech’s case, at 35.21 percent, earlier this week.

Luo said the duties won’t increase pressure on Suntech to manufacture abroad because the decision to expand capacity outside China was made without regard to the trade dispute.

“We seek to move close to our customers,” Luo said.

Shunfeng plans to install 3 gigawatts of solar projects this year as part of a plan to build 10 gigawatts in the three years through 2016, the company said in January.

While Luo said China may reach its target of adding 8 gigawatts of rooftop plants this year, Trina Solar Europe President Benjamin Hill and SMA Solar Chief Executive Officer Pierre-Pascal Urbon said that share may be lower.

‘Not Ready’

“The Chinese market is not yet ready in all aspects to be able to turn on significant volumes of distributed generation on short notice,” Hill said in an interview. “It’s a tight target, but full credit to the Chinese government for putting it there.”

While the first quarter in Europe was “difficult,” Hill said he sees a “huge” increase in the U.K., where as many as 4 gigawatts may be installed in the next nine months before a planned subsidy cut. Smaller markets such as Thailand, France, India and Switzerland may be compensating for a drop in other European markets, he said.

“Sustainable markets are better than boom-and-bust markets,” Hill said.

Before it's here, it's on the Bloomberg Terminal.