The China Effect 

Recent announcements by two giant US solar manufacturers raise more questions about whether American companies can compete with China.

When Fremont solar manufacturer Solyndra collapsed in September, most everyone — including the Express — attributed it to the company's whole-hog investment in a costly silicon alternative bound for failure when silicon prices plummeted. Yet a grim new earnings report from San Jose-based solar energy company SunPower, which has offices and a plant in Richmond, appears to show that even manufacturers of traditional silicon panels are being hurt by the glut of low-cost silicon panels coming out of China.

SunPower, which on September 30 was awarded a $1.2 billion loan guarantee similar to the $535 million federal loan given to now-bankrupt Solyndra, announced last week that it lost $370.8 million in the third quarter of 2011, more than double its second-quarter losses of $147.9 million and reversing its third-quarter 2010 gains of $20.1 million.

Increased competition from heavily subsidized Chinese factories resulting in oversupply, reduced demand, and dropping prices worldwide clearly poses a serious challenge for the company's future. And recent news suggests that even well-established US silicon-panel manufacturers like SunPower, which produces one of the world's most efficient cells and is the country's second-largest solar manufacturer, will have a difficult time competing with Chinese operations, which also benefit from cheap labor. Concurrent with the earnings announcement, SunPower reported that it would reorganize its executive board and restructure the company to improve operating efficiency, "consistent with the more competitive marketplace," said chief executive Tom Werner.

SunPower isn't the only local powerhouse to be hurt by China this year. Tempe, Arizona-based First Solar, the world's biggest thin-film manufacturer and the lone US solar company larger than SunPower, canned CEO Rob Gilette without explanation on October 25. A week later, it too announced a restructuring plan designed to trim operating costs, and added that it would be holding off on building a new plant in Vietnam. In August and September, First Solar received three loan guarantees from the federal government totaling $3 billion.

First Solar, which has an office in downtown Oakland, manufactures photovoltaic modules that, like Solyndra's, rely on an alternative to silicon — in this case, low-cost cadmium telluride. Yet the company's position as an industry leader is being threatened by the declining cost of silicon cells, which this year fell nearly 40 percent to as low as $1.10 per watt. First Solar, meanwhile, currently produces thin-film cells for approximately $0.75 per watt. While First Solar's second-quarter 2011 financial statement reflected a dismal 62 percent dip in profits, its most recent report showed slight improvements in both sales and revenues.

Comments

Subscribe to this thread:

Add a comment

Anonymous and pseudonymous comments will be removed.

Latest in Eco Watch

Author Archives

  • Recreation Calendar

    Our annual guide to Northern California's summer recreation season.
    • May 21, 2014
  • Green-Energy Storage: 'The Next Big Thing'

    For California to reach its ambitious climate-change goals, it must figure out how to deliver electricity when the sun isn't shining and the wind isn't blowing.
    • Sep 4, 2013
  • More»

Most Popular Stories

  • What Is Cannabis Doing to Our Brains?

    A UC Berkeley neurobiologist lays out the current scientific research.
  • The Warriors' Empty Gesture

    The team's new Town jerseys and logo finally recognize Oakland after all these years. But they mean nothing if the Warriors refuse to pay their $40 million debt.
  • District Attorney Candidate Accused of Exploitation

    Civil rights lawyer Pamela Price has put the Oakland police sex abuse scandal at the center of her campaign for Alameda County DA. But the victim in that case isn't supporting her candidacy.
  • The Treatment Industrial Complex

    As California transitions away from mass incarceration, a notorious private prison company has landed a multimillion-dollar state contract to provide inmate reentry services.
  • The East Bay's Changing Demographics

    If recent trends continue, the number of Black residents in the urban East Bay will decline further, as the percentage of Latinos and whites rise.

Special Reports

Holiday Guide 2017

A guide to this holiday season's gifts, outings, eats, and more.

Taste, Fall 2017

© 2018 East Bay Express    All Rights Reserved
Powered by Foundation