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Solar Insights: How low will China solar PV panels go?

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Australia’s only remaining solar PV panel manufacturer, the Adelaide-based Tindo Solar, has called on the federal government to enforce anti-dumping legislation to stop the flood of cut-price panels from China.

The Tindo Solar  management made the call to government officials in private meetings on Friday when Prime Minister Julia Gillard attended the opening of the 60MW plant.

The management said they felt they got a sympathetic airing, and have also approached South Australian Senator Nick Xenophon to push for anti-dumping rules. “I am aware of the issue and the Australian Government is currently exploring options to remedy,” Gillard was quoted in a statement issued by Tindo Solar.

CEO Adrian Ferraretto said his company was not calling for tariffs – as had been imposed in the US and is being considered in Europe. “We can compete with the Chinese in a fair market,” he told RenewEconomy in an interview.

But Chinese firms all across the spectrum were dumping panels below cost in Australia, and some tier 3 manufacturers – propped up by Chinese government support – were quoting prices of less than 50c a watt.

Tindo Solar wants Julia Gillard to enforce anti-dumping rules on Chinese solar PV manufacturer

That’s less than half their real cost,” Ferraretto said. “If it was a clearance sale, you’d accept that. But they clear this stock out, make  more, and then do it all over again.” He said there are about 5,000-6,000MW of surplus stock in China.

Tindo Solar, which began production earlier this year, is targeting the niche premium market. Its panels feature micro-inverters which    improve output and performance and boast a “world-first” 25 year warranty.

However, the plant is still operating well below capacity, with around 1,000 panels a month – compared to its annual capacity of 240,000.

Tindo Solar is Australia’s only remaining solar PV manufacturer following the closure earlier this year of the Silex Solar plant in Homebush, which had attempted to revitalize the previously mothballed BP Solar facility.

Silex Solar ceased manufacturing solar cells at Homebush because it could no longer compete with Chinese imports, and later conceded defeat on the module market as well. Origin Energy, also wrote off its investment in the Sliver solar PV technology, which had originated at the Australian National University, and had been under development in the US in a joint venture with Micron Resources. It closed its plant there because it could no longer compete with China.

Ferraretto repeated his claims made in an interview with RenewEconomy earlier this year that Tindo Solar can match the Chinese on manufacturing costs – at least on like for like quality – but it cannot afford to sacrifice its margins in the same way as the Chinese manufacturers. Recent estimates put combined losses this year – even among the tier one Chinese producers – at more than $3 billion since the start of 2011.

Li Junfeng, deputy director of the energy research institute of the National Development and Reform Commission, and one of the most influential people in the development of China’s renewable energy policy, recently told the Financial Times that at least half of global solar panel manufacturing capacity will have to shut down through “powerful market competition” and “cruel elimination”. “Without a huge capacity phase-out there is no way to solve this crisis,” he told the FT.

California utilities look to the future

It was refreshing to see a long-term view taken by California’s Public Utilities Commission over contracts written to support new solar thermal power plants in that state. California, of course, has a 33 per cent renewable energy target for 2020, but PPAs struck by its utilities have to be reviewed by the CPUC to ensure they are fair to customers.

In its latest ruling, the regulators approved two out of five proposed PPAs for solar projects to be developed by Brightsource Energy, choosing the projects that will develop new technologies because these would ultimately benefit the customers in the future. The projects approved include the Sonoron West project which will include molten salt storage that will allow the plant to continue generation several hours afer the sun has set.

“Storage significantly improves the value” of solar-thermal systems, CPUC President Michael Peevery said. “Ratepayers’ long-term interest will be best served in my view by beginning to invest now in advanced technologies.” That criteria also earned a contract for the Rio Mesa 2 project, which doesn’t have storage but includes technical advances that are considered “a necessary precursor” to developing solar-thermal systems that do use molten salt.

Solar thermal is more expensive than solar PV, which is why many projects have switched technologies, and solar thermal plans need the support of higher priced PPAs. However, CPUC commissioner Michel Florio said the Sonoran West project was an “extremely valuable” technology that is “really what we’re going to need in the future,” and so was worth the investment.

What a contrast to the position taken in Australia by the bulk of utilities and the  statutory authorities that regulate and deliver judgement on the industry in Australia. Let’s hope that the Clean Energy Finance Corporation is able to make similarly inspired decisions.

One million panels and counting

On the subject of California, Warren Buffet’s MidAmerican Solar and First Solar have announced the installation of one millionth solar PV unit at the 550MW Topaz solar farm that is currently under construction in California. The solar farm will eventually feature up to 9 million individual modules. Construction work on the project started in late 2011, with the first module installed in May this year. The project is scheduled for completion in 2015. Australia’s largest solar farm, the Greenough River project also built by First Solar, boasts 168,000 panels and a rated capacity of 10MW. Topaz has a 25-year PPA with a local utility.

BIPV market to boom

The market for BIPV (building integrated solar PV) is expected to treble in the next three years to become a $7.5 billion market by 2015. Most of this growth is expected to come at the expense of conventional solar panels (that market is expected to contract to around $8 billion by 2015), and two-thirds of it will come from new building, installed in walls and glass products. Several Australian companies are involved with BIPV products including DyeSol and Bluescope.

 

 

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  • Jeremy Waller

    Perhaps Mr. Ferraretto could ask the government to be a co-investor in the solar manufacturing plant. The government invests heavily in the automotive industry also.

  • Robert Johnston

    Adrian Ferraretto says that 50c is half the cost to manufacture Chinese panels – rubbish. Prove it mate, or did you mean half YOUR cost to manufacture? The reality is the Chinese are able to manufacture and sell PV modules at less than the cost to manufacture in Australia – just like just about everything else – so anti-dumping wont help Adrian.

    In any event dumping never lasts long, even the Chinese want to make money – its the new national hobby in case you hadn’t noticed!

    If we are going to prop up manufacturers(like Adrian) lets at least do it properly and have tariff’s on everything so that everything is manufactured here and all the jobs are here, not just the ones that make Adrian money.

    Then again, we could concentrate on making renewables more cost effective by continuing to buy the parts from the best suppliers at the best price available.

    (I do not work for a Chinese module manfacturer)

  • http://vulcanenergy.com.au Rob campbell

    Anti-Dumping is a falsehood. Yes I believe that there are some Chinese companies re-investing their profits from the time that solar modules went above $180/watt in November 2010, but any measures taken by the Australian Government to stop the market forces on panels will only murder the industry in Australia and make us look very weak. Look at our major supermarkets and suppliers, all of these companies “buy” market share when they need to increase sales. Most Chinese companies are doing the same thing. There is not a conspiracy by the Chinese government to artificially reduce the cost of modules. In fact, I have just returned from a long trip to China, and the indications are that the government is just about to allow grid connect systems to be installed and if that happens, we will be begging for Chinese product and will be forced to pay market prices, which will not necessarily be the same as the China market is paying. We will be bidding on what available production there is, and, I can tell you, there won’t be much left once China starts moving.

  • http://ronaldbrak.blogspot.com.au/ Ronald Brak

    I think the proper policy response for Australia at this time would be to write a letter to China thanking them for providing low cost solar panels. If China is dumping solar panels then they are selling them to us at below cost and so we are saving huge amounts of money. I do not see how that could be a bad thing for any Australian who does not own or work in a solar panel plant, and to a first approximation the number of Australians who own or work in solar panel plants is zero. Now I hope Tindo can succeed in the high end niche they operate in. Personally I’d like to give them a hand and if they want they can contact me and let me know how I can help out. But in the end, at some point, free enterprise has to be free to make mistakes. And it may turn out to have been a mistake to build a solar panel plant in Australia. It’s not fair to the rest of us to ask us to miss out on cheap Chinese solar panels in order to benefit Tindo. I hesitate to point this out, but it needs to be said, it’s just rude to ask.

  • Simon

    If the Chinese taxpayer wants to provide us with cheap energy, I say “let ‘em (and thank you very much)”.

  • http://pragmatusj.blogspot.com.au/ John D

    One of the arguments for cleaning up power is that it will stimulate the economy. That is not going to happen while the WTO extremists are insisting that countries have to use cheaper imports even if the country already has crippling debts (I am thinking of the US)
    Suspending WTO rules for climate action might help save the planet and a raft of economies.

    • http://ronaldbrak.blogspot.com.au/ Ronald Brak

      John, are you thinking that when I buy a pair of pants from China that’s a negative for the Australian economy rather than a wash? After all, the money paid to the Chinese manufacturer is just going to be used to purchase something from Australia.

  • Jonathan Prendergast

    It seems pretty clear that Chinese manufacturers are artificially keeping the price down in the short term, so other manufacturers around the world fold. How else can the price reduce another 50%, after already significant reductions getting the price down to $1 per watt just a few months ago?

    Another side effect of this, is it destroys investment in innovation. Why develop a panel that is 20% more efficient, if the existing ones are being sold at half price?

    • http://www.vulcanenergy.com.au Rob campbell

      Jonathan, your point is valid, however the argument that the prices that are being kept artificially low, belies the fact that the technology behind the product is over half a century old, it is only natural that once you make anything in quantity, the price drops. Figures I can work out on the cost of Solar PV for say a 190watt panel are: Glass – US10.00, Frame US7.00, EVA US20, Term Box US4.00, Tracks, Labour and Packing US20, Total of US61.00, add the processing cost of say US11 for the silica. So we sit at US72.00. Silca is supplied in the main by US cartels, it is the most abundant mineral element on earth, even at USD50 per module it is probably over priced. So at US141 for a 190w module we are looking at US0.64 cents a watt. These figures are reasonably conservative, but it is inevitable that they will get cheaper, there just isn’t any reason for the prices to go up. Consider a Clipsal Double GPO, wholesale price $7.50, the cost to manufacture? 12cents! It is not fair to blame falling PV prices for stifling development, when the technology is so old and embedded.

  • s

    Well… they are making about 40 or 50 panels a day, that’s 12.5kW day.

    Hardly worth protecting!

    I love Adrian’s “That’s half their real cost” at 50c quote…. and “We can compete in a fair market”

    To quote Darryl Kerrigan “Tell him he’s dreaming”

  • Aldrich Ames

    Ok… just and update… I think the opening may have been a bit premature… just been forwarded a email… Tindo have dropped their price and anyone can now buy direct from the factory gate.
    I can read the headline now… Local plant crushed under the weight of cheap Chinese dumped products…

    Funny thing is the directors of this mob chose to take the chinese on at something they are good at.