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OPINIONSUBSIDIES


U


nfortunately the solar industry is not a level playing field at present. Although


many countries are providing much needed subsidies to kick start local demand there is still concern that some areas are providing greater assistance than others. A prominent example is the amount of support the Chinese government is providing some of their solar based companies. Recent media reports suggest the government has provided enormous loans to their top PV manufacturers. These manufacturers are using the money for incredibly rapid expansion so that they are fast outgrowing their European competitors.


The bigger foundation allows the companies to greater efficiency, which means the large Chinese players now have even lower costs than their foreign competitors. There are obviously cries from US and German manufacturers about violations of international trade laws etc and indeed the situation is particularly unfair seeing as it was the German FiT that created the Chinese manufacturers in the first place, but there is little chance of any legal recourse in the near term. The situation has led German policy makers to think about protectionist policies for solar though (‘buy German’) and provided fuel for the anti-solar lobby.


All that aside, the top-tier Chinese solar manufacturers are now producing high quality modules with lower costs than anyone else. They have had a lot of experience with due diligence from European banks and are now pro-active in respect to quality control and bankability. They are also beginning to invest heavily in R&D which will close the already small technology gap with Japanese and European competition.


Chinese solar manufacturers are integrating vertically in the value chain in a big way. This means that for example cell manufacturers are starting to make wafers, silicon and modules etc. This gives them greater ability to control quality and improves margin retention. They are also expanding downstream and bulking up sales teams in Europe with Europeans. This reduces the ‘fear factor’ of working with Chinese companies and taking revenue away from European wholesalers. The strength of the big Chinese players is evidently putting a strain on its


competition. If one had to choose between German or Chinese manufacturers as the most likely to be around in 25 years it would almost certainly be the Chinese.


It should be noted that there a number of Chinese manufacturers that do not have such high standards and should be avoided. Many people in the solar industry are not convinced that the UK’s Microgeneration Certification Scheme is effective at weeding inconsistent manufacturers judging from some of the companies so far through. There are also lots of counterfeit modules on the market now (for example fake Trina Solar and ET Solar modules are widespread) so its important to find installers with good checking procedures.


Local creation


So does the rise of the big Chinese solar manufacturers damage the UK and make the Feed-in tariffs pointless, seeing as it will support the continued growth of unbeatable foreign competition? I would argue that the only way to create growth in our manufacturing industry is to


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www.solar-pv-management.com Issue I 2011


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