October 17, 2012

Chinese solar manufacturers - who will survive?

Chinese solar panel manufacturers are struggling to survive with a mountain of debt in a climate of reduced demand and global government support. I read an article recently that had the following interesting statistics:

  • The top 10 Chinese manufacturers have a combined debt of US$7.8Billion dollars
  • The average gross margin across these same players is 4.7%, the lowest is -39%
  • Inventory across the top 14 manufacturers is worth US$4.4Billion dollars – equivalent to around 27 million solar panels

Clearly this is not a sustainable position and even the largest solar panel manufacturers are not immune. Suntech, once a solar powerhouse is now struggling to survive with massive debt levels, senior management departures, fraud allegations and a share price that has fallen from over $85 to only $0.77 – only time will tell if it survives.

Australia, which has not imposed import tariffs on Chinese made solar panels, is in danger of becoming a dumping ground for solar panels, currently more than 50% of our solar panels are from Tier 3 and Tier 2 suppliers. In our race to have cheap solar, we may be buying – and supplying  – the lowest possible quality from companies who even today may be non-existent.

REC a Tier 1, vertically integrated solar manufacturer has one of the strongest balance sheets of any solar company. With a sound business model, manageable (and decreasing) debt levels and one of the best solar manufacturing plants REC will survive this turmoil.

Choose your solar panel wisely and remember the following adage “Caveat Emptor”  (or buyer beware) which in practice means ”You get what you pay for, ”Don’t expect something for nothing” and ”If it sounds too good to be true, it probably is”.

Sunshine Coast Solar is an REC solar professional and one of the oldest solar companies on the Sunshine Coast. Contact us if you want quality solar solutions for a great price.