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March 14th, 2013

Suntech ‚?? Once World‚??s Largest Solar Cell Manufacturer ‚?? Near Financial Collapse

by Andrew Price, President & COO

Suntech Power, a large solar photovoltaic (PV) cell manufacturer based in Wuxi China, may soon be taken over by Wuxi Guolian, a municipal holding company with significant manufacturing, financial, and real estate holdings. The news was reported in the New York Times today. Suntech solar panels are widely used in the US, including at the Westford Solar Park in Westford Massachusetts, pictured below. The Westford Solar project, which is already operational and should not be impacted by this development, is under contract to sell net excess generation credits to the University of Massachusetts Lowell. UMass Lowell is a longtime client of CES and we advised the University on the solar PV transaction.

Suntech, the world’s largest solar cell producer in 2011, is traded on the New York Stock Exchange. Suntech shares are trading at $0.60 this morning, down from $40 in 2008. Suntech solar cells are made in China, but panels for installation in the US are assembled in Goodyear Arizona so that they can qualify for certain made-in-America designations and incentives. Suntech annouced on Tuesday of this week that it would close the Goodyear facility.

Solar cell costs have plunged by 75% since 2008, driving by a massive build-up in Chinese production capacity and low polysilicon costs. Solar PV manufactures based in the US and Europe have not been able to compete and have filed anti-dumping complaints against China and imposed stiff tariffs on solar cells produced in the country.

Solar cells now comprise less than 20% of a typical solar system’s total installed cost.  Many analysts see that there is room to continue reducing installed costs – even with modest price increases in solar cells. Installed costs can be reduced with improvements in packaging, inverters, wiring and other balance of plant hardware, as well as reductions in soft, or non-hardware, costs. A recent study by Lawrence Berkeley National Laboratory found that soft costs, such as permitting, interconnection with the electric grid, and taxes are as much as 5 times higher in the US than in Germany. The SunShot program, funded by the US Department of Energy, has a goal of reducing soft costs for solar PV below $1/watt.

Suntech may continue to be opperated as a going concern by Wuxi Guolian, and it remains to be seen what impact, if any, US solar developers might face due to this news. Suntech’s fate may indicate, however, that the rapid decrease in solar cell pricing will level off, or even reverse, in the near term. Luckily, continued improvements in other hardware and soft costs should keep solar system installed costs on a downward trajectory.

(Tags: Suntech, Solar PV, Westford Solar Park, Net Excess Generation Credits, Net Metering, University of Massachusetts Lowell)

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