EU recently announced it reached an agreement with China on shipments of Chinese solar modules to Europe. Related documents confirm a “pricing “deal will be implemented. According to the EU, this new mechanism will bring stable development to the EU solar energy market and avoid dumping. Observations by EnergyTrend, a research subsidiary of global research organization TrendForce noted Taiwanese manufacturers’ orders might be affected in the short term since the new EU-China agreement temporarily removes anti-dumping duties, but forecasts Taiwanese manufacturers will benefit in the long run.
The new agreement’s minimum retail price for modules will probably fall between€0.54 /Watt to€0.57 /Watt, which is about a 10% increase compared to the previous market price range of€0.5 /Watt to€0.55 /Watt, according to statistics compiled by EnergyTrend. On the other hand, Chinese manufacturers have cell and wafer products that allow them to keep minimum product costs at USD 0.54 /watt. In comparison, none-Chinese manufacturers’ lowest product costs are about USD 0.66/ watt. From current market information, due to few changes in pricing, the affect on system investment costs is about 5%, which can be compensated by adjusting other production segments, such as inverters and EPC ormaking other adjustments. From a short term perspective, the EU’s removals of punitive tariffs will greatly lower the momentum of Chinese orders transferred to Taiwanese manufacturers. Chinese manufacturers will prioritize the use of their own cells, while Taiwanese manufacturers might lose orders.
However, EnergyTrend believes Taiwanese manufacturers will benefit in the long term. With the European market’s continual reduction of subsidies and termination of subsidies to large ground-mounted plants, it will be increasingly difficult for manufacturers to maintain Internal Rate of Return (IRR) by reducing costs. Hence, taking investment efficiency into consideration, the market might quickly turn to the roof top market. In the roof top market, manufacturers have to be even more precise with investment costs and power efficiency, due to limited installation area. Demands for high-efficiency products will hopefully surge as a result. Those in the industry said at the end of last year, commercial test runs were completed for a new manufacturing process that increased conversion efficiency by an absolute value of 0.5%-1% compared to current products. However, the products have not entered mass production due to poor market acceptance. Inquiry for these products has increased this year, though, and with new manufacturing process in place, the products can be introduced and manufactured from existing product lines. The products are estimated to enter massproduction in 3Q13, as the end of depreciation and amortization of current product lines are expected to bring good product profits; and with Taiwanese manufacturers solar technology six month to one year ahead of competitors.
Although, the new agreement will be of little help to Taiwanese manufacturers in the short run, from a long term perspective there will be a chance to establish market structure, said EnergyTrend. In addition, as the European market speedily transits into the roof top market, Taiwanese manufacturers can utilize advantages in celltechnologies. In the future, Taiwanese manufacturers will be able to compete with other manufacturers in the European roof-top market if they can integrate module manufacturing process, and improve cost structures.