|
03 July 2012
Posted in
Editors Blogs
Schott Solar stops its crystalline silicon production by the end of the year due to difficult market conditions. Global Solar “addresses the challenging EU solar market conditions” and stops production of flexible CIGS-modules at the plant in Berlin-Adlershof, a facility that has started production late August 2011 and thus was on-line less than 12 months.
These are only the two latest announcements in a now long list of insolvencies, production cuts and reorganizations. Global Solar CEO Dr. Jeffrey Britt calls the EU renewables market “financially challenging due to high inventories, collapsing prices and significant reductions to European feed-in-tariffs”.
Basic economics
The description of the current market conditions is true, without a doubt. However, with all due respect to the jobs that are now at stake or already lost, what the PV business experiences at the moment to a great extent follows basic economic rules, even under consideration of the FiT regulations and the dumping allegations against Chinese manufacturers. In a growing market, competition rises and at some point the market might change from a supplier-dominated market to a buyers’ market, and the price decline accelerates. At the same time, suppliers have to stay competitive and must invest in production technology, but as well – or even more – in scaling the output to make their products cheaper and remain competitive, which puts additional pressure on prices.
Naturally, not all suppliers can survive the shakeout. Even the adjustments of FiT systems – subsidies that only made the PV boom possible in the first place – tend to follow market principles, and decrease as the market prospers and becomes mature, though one can certainly argue about the speed and the level FiTs went down in the various countries in the last couple of months. And, not to forget, as the adjustments made now by the manufacturers are reactions to changing market conditions, no one would have expected that these conditions remains always the same. Adaptation to changing conditions is another basic economic prerequisite to survive.
The good news
What almost drowns in the crowd of bad new, however, is the fact that there are still investments in production in Germany. Dunmore Corporation, for example, just expanded its European manufacturing capacity for high-performance thin-film products with major investments in new production lines at its Freiburg, Germany facility.
Written by Andreas Breyer, Senior Editor, Germany, Solar Novus Today
