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SolarWorld Announces Insolvency Due to Debt and Business Recession

published: 2017-05-11 17:11

SolarWorld AG, the company that fired severe solar trade wars between China, the U.S., and Europe, has officially announced to file for insolvency proceedings on May 10 due to incapability of paying off its debts.

SolarWorld stated in a short statement that: “The management board of SolarWorld AG, after having conducted a diligent review, came to the conclusion today that due to the ongoing price erosion and the development of the business, the Company no longer has a positive going concern prognosis, is therefore over-indebted and thus obliged to file for insolvency proceedings.”

Frank Asbeck, SolarWord’s founder and CEO, described the insolvency as a “bitter step,” according to PV Magazine’s report. He expressed his appreciation to all SolarWorld employees for their effort of constructing a fair competition environment in the solar industry.

SolarWorld’s bankruptcy was, again, blamed for rapid module price decline began in the second half of 2016 from China.

Trade barrier was unable to avoid business recession

The PV industry has been in oversupply for years and the module price has been declining year by year. SolarWorld went into loss since 2014, and the financial loss worsened in the second half of 2016.

Although SolarWorld appealed for trade protections (anti-dumping and countervailing measures) against China and Taiwan, the company was unable to return to profitability effectively because both Chinese and Taiwanese PV makers have gradually established extra capacities in third-party countries since 2015.

The global module price decline also accounted for SolarWorld’s loss.

Three issues to come

“SolarWorld AG’s insolvency will directly lead to three questions,” pointed out an analyst at EnergyTrend. “First, will SolarWorld Americas Inc. follow and file for insolvency? Second, will there be a supply void? Third, will the protection measures implemented by the U.S. and Europe continue?”

For the first issue, it is unclear whether SolarWorld Americas will go bankrupt or not at this moment. However, the answer will be closely related to the third issue – the trade barriers. Will the measures still be implemented in case that SolarWorld AG (and SolarWorld Americas) went bankrupt? The same question can further be correlated to China’s anti-dumping and countervailing measures on polysilicon imports from Europe.

For the second question, SolarWorld had 1.5GW production capacities for ingot, wafer, PV cells and modules by the end of 2016, according to the company’s 2016 Annual Report, while it also planned to relocate them in 2017. In SolarWorld’s 2017 relocation plan, it would have over 1GW of solar cell manufacturing capacity back to Germany.

In 2016, SolarWorld shipped around 14% of it modules to Germany and around 500MW of modules to the U.S. As SolarWorld AG has filed for insolvency, it is expected to create a supply void, of which the volume is depending on the progress of SolarWorld’s capacity transition.

Suniva has filed its petition under Sections 201 after it filed for chapter 11 in the U.S. this April. EnergyTrend expects that Sections 201 will stimulate a short-term demand rush in the U.S. SolarWorld AG’s insolvency, therefore, will create module shipment opportunity for other suppliers.

(Lead photo courtesy to SolarWorld AG. Figures from SolarWorld's 2016 Annual Report)

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