Reality Hits the fast growing Chinese Solar Manufacturing Industries

 

The importance of Government and Bank support in the field of Solar for the local players has been shown by Chinese Banks for their manufacturers. With the sharp decline in the prices of solar modules worldwide, the world has already seen the downgrading or in some cases even shutdowns of various big manufacturing companies of Europe and US. The result of such a downfall as people call it is because the Chinese manufacturers have come up so fast with the cheap technology of solar modules.

Chinese Solar industry that is termed to be the biggest industry and believed to be among the most profitable is finally seeing the reality which they were not realising until now. But even in scare of such market there has been a lot of support from the Chinese banks to bail them out from such severity of high debts. As said by Wayne in an article “China’s top 10 listed solar companies, though saddled with a combined debt put at $17.5 billion by investment bank Maxim Group, have emerged relatively unscathed from market woes that have driven foreign peers to the wall.”

As compared to Chinese scenario many European companies crunched to the downfall in the market as they were unable to raise the capital against the debt they had. Q-cells which are one of the largest solar cell makers in the world filed for bankruptcy in April as it was unable to clear a debt of $725 million. Even the biggest Chinese companies are also running into losses with the prices of modules going way below than expected. It was the period of 2009 till 2011 in which the solar companies took much of the debt during the downturn of market. Banks also supported such companies with debt as these companies helped to generate employment as also provided a huge boost to China’s economic growth, there banks took the responsibility of providing such companies with debts.

To make sure that these investments don’t go to waste, instead of asking the companies to clear the debt local banks rolled over mature loans each year according to Chinese solar companies and analysts. World’s largest supplier of solar panels Suntech Power Holdings has also huge debt to their name and though they are hopeful to clear it still analysts and shareholders are working out alternative ways with the banks to form an agreement to clear the debt. Even though to repay the debt companies are lowering prices but to remain in the market they will need additional capital which will be very difficult to get with current market scenario.

Apart from these there are many other big solar manufacturers who have huge debts which they are due to pay this year and if the banks decide to recall the capital instead of saving their investments it will be very difficult for companies to compete in the market. So unless there comes a big boom in the solar market all of a sudden companies are going to face real difficulties in the near future.

(Source: Wall Street Journal)

 

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Posted on September 1, 2012, in Solar in Industries, Solar technology and tagged , , , , . Bookmark the permalink. Leave a comment.

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