A cloudy outlook for Suntech, one of the world’s leading solar panel makers.
In the face of falling prices due to oversupply, the Chinese company’s main subsidiary is unable to pay its bills and has filed for bankruptcy protection to allow time for restructuring.
Reportedly the local government in Wuxi – where the firm is based – could bail it out to protect 10,000 local jobs, as well as other income.
Lian Rui, Senior Analyst with industry consultancy Solarbuzz, explained the logic of that: “I think the Wuxi government will be thinking about its own issues including local GDP, taxes, employment questions, and other companies in the supply chain. In addition, Suntech has a lot of debts and loans from local banks.”
China has put huge resources into building up its solar power industry, but has been accused, in the US and in Europe, of unfairly subsidising production which could lead to the introduction of tariffs.
In addition demand has not kept pace with supply. Professor Zhang Huiming of the School of Economics at Fudan University blames the customer countries and said their policies towards the industry need to change: “We developed so quickly because European countries like Germany and Spain, and also the US, used to have policies encouraging the use of solar, promoting those policies that were good for consumption.”
Oversupply had pushed down solar panel prices by about 75 percent over the last four years, undermining the economics of the business and hitting manufacturers worldwide, including Germany’s Solon and Q-Cells.
Experts predict more problems ahead with producers unable to cover their costs at the current low prices.