Posts tagged with: chinese solar panels

Unfortunately the solar industry is not a level playing field at present.  The Chinese government has provided some enormous loans to their top PV manufacturers (e.g.  These manufacturers are using the money for incredibly rapid expansion so that they are fast outgrowing all of their European competitors.  Being bigger means they have greater efficiency, which means the large Chinese players now have even lower costs than their foreign competitors.  There are obviously cries from US and German manufacturers about violations of international trade laws etc and indeed the situation is particularly unfair seeing as it was the German FiT that created the Chinese manufacturers in the first place, but there is little chance of any legal recourse in the near term.  The situation has led German policy makers to think about protectionist policies for solar though (‘buy German’) and provided fuel for the anti-solar lobby.

All that aside, the top-tier Chinese solar manufacturers are now producing high quality modules with lower costs than anyone else.  They have had a lot of experience with due diligence from European banks and are now pro-active in respect to quality control and bankability.  They are also beginning to invest heavily in R&D which will close the already small technology gap with Japanese and European competition.  Chinese solar manufacturers are integrating vertically in the value chain in a big way.  This means that for example cell manufacturers are starting to make wafers, silicon and modules etc. This gives them greater ability to control quality and improves margin retention.  They are also expanding downstream and bulking up sales teams in Europe with Europeans. This reduces the ‘fear factor’ of working with Chinese companies and taking revenue away from European wholesalers.  The strength of the big Chinese players is evidently putting a strain on its competition. If one had to choose between German or Chinese manufacturers as the most likely to be around in 25 years it would almost certainly be the Chinese.

It should be noted that there a number of Chinese manufacturers that do not have such high standards and should be avoided.  Many people in the solar industry are not convinced that the UK’s Microgeneration Certification Scheme is effective at weeding out these poor manufactures judging from the companies which have gotten through.  There are also lots of counterfeit modules  on the market now (for example fake Trina Solar and ET Solar modules are widespread) so its important to find installers with good checking procedures.

So does the rise of the big Chinese solar manufacturers damage the UK and make the Feed-in tariffs pointless, seeing as it will support the continued growth of unbeatable foreign competition?  I would argue that the only way to create growth in our manufacturing industry is to develop a domestic end-user market.  For a long time the UK has precious little in terms of PV manufacturing capability, which means that the strength of Chinese companies has little impact on us.  If we were not buying from China, we would be buying from elsewhere.   As the UK market grows, more people become engaged in the industry and start to look at product innovation.  Already there are a number of UK companies developing solar products specific to the UK market as a direct result of the introduction of the Feed-in tariff.

Furthermore, module manufacturing makes up only a small portion of the solar value chain.  Installing roof-top PV is highly labour intensive, and the feed-in tariffs will create a huge number of jobs in the badly suffering building services industry.  The fact that there are good quality, cheap Chinese panels available allows solar PV to be more competitive as a renewable energy source.  Costs are expected to fall rapidly over the coming years (as they have already) meaning that in around 5-6 years time the cost of solar electricity will be at par with retail electricity prices, which means the FiTs won’t be needed anymore.

Another point is that the big Chinese PV manufacturers will start doing the last manufacturing step, module integration, close to their markets.  This is because you can air freight solar cells, but you have to ship finished solar panels because of the glass (regular glass factories normally only serve a radius of 100km).  By doing module integration close to their key markets, manufacturers won’t have working capital tied up for 4 weeks and will reduce the risk of damage in transport.  Sharp already do this with a module integration plant in Wrexham, and we may well start seeing the Chinese companies open manufacturing plants in Europe, even in the UK, over the next couple of years which would provide an interesting boost to UK industry.

Eventually the playing field will level out again – China will get more expensive and there will be space for newcomers with new technologies, but for now the Chinese players clearly have the upper hand.

In recent weeks I have seen several proposals for ‘buying groups’ for residential solar energy installations in the UK. The principle is that rather than individuals from the same area each seeking an installer for their solar panels, a buying group involves a number of home-owners clubbing together and seeking a single installer to do all the installations in one go.

There are several benefits to this. The main reason is that it leverages economies of scale, meaning that you should be able to get an overall lower price because the installer is able to source equipment in larger quantities and utilise their staff better by working in a concentrated area. The second big benefit is in administration time. Choosing an installer for your solar installation is time-consuming. You need to get quotes from several firms, who should each give a site-visit before giving their final price. In a buying group, this process is minimised because you have one tender process for the whole group.

A nice thing about buying groups is the community organisation aspect. Installing solar panels is now very profitable, both financially and environmentally so working as a local group is a great way to bring the community together to do something real that makes a difference. So how do you go about setting up a buying group? The best way is to find a group of people that already have some sort of local connection. This could be something like a residents association, a sports club, a church group or even pub regulars. The important thing is to ensure that the process is clearly explained to potential participants. It is also possible to advertise locally, but make sure you are open about whether you plan to make money from doing the organising or not.

Once a reasonable number of people have expressed an interest (I would say 5 or more counts as reasonable but this is not fixed), the group organisers can start to contact installation firms. Make sure to get full quotes and make these available to all participants to make the process as open as possible. It may even be worthwhile inviting the installer to a group meeting in order to give their ‘pitch’ so that everyone can compare the offers.

Something to be aware of is that there are a growing number of people already organising local buying groups.  Some of these groups are people doing it out of their own time because of their passion for the community and renewable energy. Other groups however, are trying to make significant amounts of money from being a middle man.

I have seen more than one proposal from buying groups looking to take ten percent of the cost of an installation as commission. This strikes me as a bit unfair since the idea of the buying group is to lower costs for the members.

Organizing a buying group takes a considerable amount of time, and so taking some money is acceptable. Personally, what I don’t like is people pretending to be doing the community a service but actually using it as an easy way to make some quick cash. Ten percent is also a bit steep. The idea of the buying group is to lower costs for everyone, this clearly doesn’t work if all the saved costs are going straight to the organisers of the buying group.

So genuine buying groups are a great idea, just beware the profiteers. If someone approaches you as a buying group be sure to find out how much money they stand to make.