Led by solar industry, the green energy industry has faced unprecedented policy storms in 2014. Different from bankruptcies caused by the financial crisis in 2008, the policy storms changed many countries’ and companies’ development strategies. At the same time, energy storage systems and smart grids are becoming more crucial to infrastructure of renewables and electric vehicles are entering the mainstream market as well. We will discuss turnkey events, new technology, energy policy and solar market outlook in our 2014 yearly review series.
|A rooftop solar system installed in Vietnam, one of the emerging markets. (Source: Intel Free Press via Flickr)|
Focus Areas of 2014: New Energy, New Policy, New Strategy
1. Trade Wars
The solar trade wars initiated by China, U.S.A. and the EU are the most crucial events in 2014. As China, the world’s largest solar market and the leading solar maker, is involved, the trade wars undoubtedly have huge impacts on the global PV supply chains.
Although the U.S. government has stated imposing extra tariffs on certain China-imported PV products in 2012, SolarWorld AG, a Germany-based PV manufacturer, accused that China turned to third-party countries (mostly, Taiwan) for PV cells to avoid paying the penalty. That’s the time when the so-called “anti-dumping and countervailing duty” (AD and CVD) new solar trade war was brought up and Taiwanese makers were being investigated for AD issues. After the investigations, U.S.’s Department of Energy (DOE) and International Trade Committee (ITC) concluded that Taiwanese makers de facto was harmful to the U.S.’s solar industry by dumping certain solar products, and thus decided to impose high AD tariffs from 11.45%% to 27.55%. AD tariffs to be imposed on Chinese makers are 26.71%~165.04%, while CVD are 27.64%~49.79%.
- Taiwanese PV Makers to Confront Serious Challenges as Taiwan and China Faces Similar Preliminary Anti-Dumping Tax Rates
- Change in US Anti-dumping Duty May Boost Capacity Utilization Rates of Taiwan Solar Firms
- Deployment of Global Strategy Remains the Focus after Taiwan AD Tax Rate is Lowered
The second phase of AD/CVD ruling caused severe stress to Taiwanese manufacturers because China and the U.S. are two of their main export markets. The unexpected high tariffs not only weakened their financial performances starting from the third quarter, but also forced them to accelerate global deployment. In contrast, the Chinese market is large enough to react quickly to the AD/CVD ruling. Nonetheless, Chinese makers have to find ways out for overcapacity.
|The international trade disputes impact the solar industry in many aspects. (Photo Credit: epSos.de via Flickr)|
Unfortunately, China is facing more challenges from Europe. SolarWorld led EU ProSun and petitioned the EU Trade Commission for investigating China’s action of breaking the price and volume limitation regulated in 2013, which is called “anti-circumvention” investigation. Third-party countries/regions like Japan, Taiwan and Malaysia were also accused of helping Chinese manufacturers to circumvent the limitation. The petition is currently under mulling and it is believed to influence the solar industries in those regions.
2. Carbon Emission Reduction
To deal with climate changes, many countries view renewable energy as a solution. Meanwhile, advanced renewable technology is now widely recognized as a good method to reduce carbon emissions.
At the Obama-Xi Summit, the two leaders reached an agreement to reduce the carbon emissions. The U.S. agreed to cut carbon emissions by 26%~28% by 2025 ; and China promised to continue to develop zero-emission energies and make the same level of cut by around 2030.
|Xi and Obama's meet in this March. (Photo Credit: US Embassy the Hague via Flickr)|
As for China, a country which is struggling for air pollution, alternative energy is the solution for both the energy and the anti-pollution. In addition to developing new energies like solar and wind power, China is striving to encourage its people to drive electric vehicles. Being the world’s largest market, China’s new carbon emission targets and energy policies show that the country is now completely open to green industry.
3. Altering Policies
Renewable energy development is closely connected to a nation’s policies, subsidies and feed-in tariff schemes. Take German and Italy for example, the two nations’ solar industries reflected an uptrend when both governments offered favorable incentives but reflected a downtrend when the subsidies became lower. Energy policy is a sign for us to have a clearer forecast of the energy market.
Boosting incentives for renewable energy since around 2008 in some part of Western nations apparently improved the industry. However, the market focuses have been shifting from the Western to Asia in recent year and Japan seemed to take over the leading position at this point. After suffering from 2011’s Fukujima nuclear disaster, the Japanese government has been strongly emphasizing on solar power to reduce its reliance on nuclear power as well as making solar power a solution for blackouts. In the meantime, China is establishing itself as the world’s largest PV manufacturer and market by implementing a series of ambitious renewable energy policies.
However, more and more nations have decided to gradually cut incentives for renewables. UK, Germany, Japanese and Australian governments have announced subsidy-cutting plans for 2015, and this may be translated into a decrease of renewable energy in the following years.
- UK to Cut FiT for Small-scale PV Installations
- Japan May Again Revise Down the Incentives for Solar Projects
- India Chief Minister Raje Signs MOU for 1000MW Solar Plant
Amidst the incentive-cutting trend, Japan suddenly announced to suspend the grid-connecting application from utility-scale solar power projects (mega solar). It is believed that the suspension will bring certain effects to the Japanese market. Besides, Japan’s market trend, policies and predicaments suggest a possible future to the solar industry: renewables, including solar, need to turn to fundamental demands, customized services and new markets.
4. Emerging Markets
South-east Asia, Africa, Latin America and Middle East are widely viewed as emerging markets for solar industry. The regions have more intense solar irradiance than the existing markets – which are expected to be saturated in the near future – and cheaper labors, making them a blue sea for solar PV manufacturers to invest in or establish manufacturing plants as well as joint ventures. Yingli Solar, a world leading Chinese PV manufacturer, showed their support to football stadiums by installing its solar systems at this year’s FIFA World Cup in Brazil. This global exposure demonstrated the company’s ambition to enter the Latin America as well as the considerable potential of emerging markets.
|Modi spoke at his inauguration. (Photo Credit: Global Panorama via Flickr)|
India is the most focused country among the emerging markets. Narendra Modi, the current Prime Minister of India who started his leadership on October 7th, introduced a series of ambitious plans to develop renewable energy in the country. He unveiled a plan to install 20GW of solar systems to take advantage of the intense sunlight in remote places where there is no access to power.
- Modi Plans to End Blackouts by Budget Plans Funds for Grid and Solar
- India Plans to Expand Its Solar Facility to 20GW in 5 Years
Below is a summary of some companies and events that gained most attention from the industry:
Combination, Cooperation and Capacity Expansion
- Elon Musk, the CEO of Tesla and the president of SolarCity, purchased Common Assets and Silevo to integrate SolarCity’s services. In the mean time, Tesla launched a Gigafactory plan with Panasonic to manufacture lithium-iom batteries. Musk’s business has combined electric vehicles, energy storage and solar power together. (related post)
- SunEdison established TerraForm Power and purchased First Wind to expand it renewable business from solar to wind. (related post )
- SunPower has reached the 1 billionth solar cell milestone. The company is also working on its cell expansion plan by expanding 750MW of manufacturing capacity in Malaysian Fabs to reach 1.5GW. Besides, SunPower bought SolarBridge for its residential business. (related post 1, 2, 3)
- SAS acquired aleo, a module manufacturer belonging to Bosch, by only 2 euros to integrate its solar manufacturing product lines. (related post)
- E.ON announced to completely focus on renewable energy development. (related post)
- Taiwan’s Motech and Green Energy Technology (GET) met a strategic cooperation regarding their silicon wafer business to reduce costs of solar cells. (related post)
- REC Solar, a Norwegian solar cell manufacturer, was acquired by Bluestar Elkem. (related post)
- Gintech and GET formed a new Joint Venture, Gintung Technology, to produce “Made-in-Taiwan” high efficiency solar modules. The initial capacity was 170MW, and the JV aimed a 320MW capacity by the end of 2014. (related post)
- Japan-based manufacturer Tokuyama announced the completion of its polysilicon manufacturing plant in Malaysia on October 31st. With an initial utilization rate of 70%, the expected annual output is 13,800 tons.
- Hanwha SolarOne merged with Hanwha Q CELLS. The new company’s solar cell production capacity will be as high as 3.28GW and will be free from US’s anti-dumping and countervailing duties. (related post)
- Motech and TSi merged into a Taiwanese solar cell manufacturer with 3GW capacity, making the combined company one of the world’s leading cell makers. (related post)
Reconstruction, Insolvency and Bankruptcy
- Wuxi Suntech filed for insolvency in 2013 and was acquired by Shunfeng Photovoltaic International with USD$533 million.
- LDK Solar’s international business filed for bankruptcy and has started reconstruction during this year.
- Shanghai Chaori Solar unveiled a debt-restructuring plan to settle its onshore bond default in March, the first case in China. In December, Chaori Solar changed its company name into with GCL Group's supports.(related post )
- GT Advanced Technologies (GTAT) bankrupted due to its sapphire supply agreement with Apple Inc. The global solar supply chain isn’t injured because GTAT has faded out from solar business. (related post)
- Nexolon, a South Korean wafer and ingot manufacturer, started turn around process in August due to financial difficulties. (related post )
- DuPont announced to shut down its thin-film production this year. Meanwhile, LG and Samsung reconstructed their production lines by quitting solar business. (related post)
- Sharp decided to close its solar business in Europe by selling Enel SpA as well as to find a buyer of Recurrent Energy.
- Taiwan Polysilicon Corp. (TPSI) decided to gradually cut its polysilicon production down to 0 ton.
- Germany inverter company SMA entered a strategic partnership with Zeversolar this year. However, the rapidly declining European market forced it to lay off some employees.
- GCL-Poly announced to sell its wafer business. (related post )